Coinbase Faces Crypto Patent Case Amid Dwindling Trade Volumes

Amid deteriorating trade volumes on the exchange, Coinbase is now sued for patent infringement over crypto transfer technology. In a complaint filed on Thursday, Veritaseum Capital accused Coinbase of patent infringement. Veritaseum is a company that builds blockchain-based, peer-to-peer capital markets as software. It alleged that Coinbase’s operations violate Veritaseum’s intellectual property rights.

Coinbase Patent Case – What’s The Issue?

In the complaint, Veritaseum alleged that the crypto exchange was violating the rights by making, using, selling, offering to sell and importing products and services into the U.S.. In essence, the company accused Coinbase of infringing a patent awarded to Veritaseum founder Reggie Middleton. The patent ‘Devices, systems, and methods for facilitating low trust and zero trust value transfers’ was awarded to the founder in December 2021.

It was legally issued to inventors, Middleton and Mathew Bogosian. Also, the patent was duly and legally assigned to Middleton and then exclusively licensed Veritaseum. Middleton also has the right to sue third parties for infringement of the patent, it said. The company, in its complaint, accused Coinbase of potentially infringing the patent in full knowledge. The defendant had prior knowledge, should have known, or at least been willfully blind of the patent, it mentioned.

Coinbase Validators Infringe Patent Claims

The complaint mentioned that the Coinbase Ethereum2 validators infringe the claims of the patent. The exchange  provided products and services including the payment of block rewards to new validators under proof of stake. Also, payment of validators from transactions on the Solana network and the transfer of NFTs from one party to another party on the Coinbase platform, it added. “Coinbase has engaged in actions that have directly and indirectly
infringed the patent,” Veritaseum alleged.

Citing patent infringement in several other fronts, the company sought at least $350 million in compensation for damages. According to a Reuters report, when Veritaseum’s representatives tried to settle out of court, Coinbase was ‘uncooperative’.