A court in São Paulo has ordered Coinbase (NASDAQ: COIN) to return nearly $100,000 to a customer whose cryptocurrencies disappeared from a Coinbase wallet.
The court rejected the exchange’s argument that self-custody protects it from liability when user funds are stolen.
Court rejects Coinbase’s defense
Brazilian courts may start holding wallet software makers responsible for user security after the São Paulo State Court (TJSP) ordered Coinbase to pay about R$507,000 ($100,000) to an investor named Joubert.
Joubert transferred his cryptocurrencies from other exchanges to the Coinbase app, and the funds later disappeared without his prior permission.
Coinbase’s defense was that it did not own the private keys to the wallet and that it did not have the ability to control transactions recorded on the blockchain.
Judge Joo-Hyun Lee applied Brazil’s consumer protection law, under which Coinbase must prove that Joubert actually authorized the transfer; Not possible.
The company was also unable to prove that the drained wallet contained basic security measures such as blocking tools and two-factor authentication.
The judge also criticized the company for submitting complex technical records without translating them into terms the court could understand.
It was the currency base He was ordered to pay the full amount Along with legal. She must also pay court costs equal to 10% of the claim.
Could the Coinbase case set a precedent?
Rafael Souza, a lawyer who focuses on digital law, said the court ruling destroys two arguments that cryptocurrency platforms often use in court.
The first argument is that self-preservation products do not impose any responsibility on the part of the manufacturer.
“Anyone who develops a product and brings it to market is responsible for its security, regardless of how the technical architecture behind it works,” Souza said.
The second argument is that companies can bury judges in technical documents submitted as case files and expect them to figure it out on their own.
Brazil’s legal system is moving toward stronger consumer protection. The country’s Supreme Court already has cases holding cryptocurrency platforms liable for fraud if they cannot prove proper security.
Also the Brazilian Central Bank Reclassification of virtual asset service providers They are classified as Type 3 institutions under Decision 580/2026, which puts them under the same rules as stock brokerage firms as of January 1, 2027, Cryptopolitan reported. The country processed about $318 billion in cryptocurrency transactions from mid-2024 to mid-2025.
What other security issues has Coinbase encountered?
Aside from the Joubert case, the exchange has been facing security issues involving fraud. Cryptopolitan reported In December 2025, on-chain investigator ZachXBT traced nearly $2 million in thefts to a single scammer pretending to support Coinbase.
Separately, Brooklyn prosecutors charged a 23-year-old man with stealing $16 million from about 100 Coinbase users through impersonation calls.
Many of these scams were the result of a May 2025 breach in which bribed third-party support agents leaked customer data. Coinbase revealed that the attackers demanded a $20 million ransom and threatened to publish records for nearly 70,000 customers.
The company set aside the same $20 million for a reward instead, CEO Brian Armstrong said.
Now, Coinbase can either appeal the court’s decision or pay the allocated fees.
