Veritaseum alleges Coinbase illegally used the patent for many of its blockchain infrastructure services to facilitate crypto payments, trading, and staking.
Bitcoin exchange After being accused of violating a patent linked to its blockchain technology by blockchain-based software company Veritaseum Capital, Coinbase has found itself in legal trouble and is now suing for $350 million in damages.
In a lawsuit submitted on Thursday to the U.S. District Court in Delaware by the American legal firm Brundidge & Stanger, Veritaseum claims that Coinbase violated the “566 Patent,” which protects cryptocurrency payment transfer technology.
According to Veritaseum, Coinbase leveraged the patent for many of its blockchain infrastructure services since it focuses on “new devices, systems, and techniques” that allow parties to “enforce value transfer agreements” with “little or no confidence” in one another:
“Defendant’s infringing activities include but are not limited to its website […] Coinbase Android mobile wallet […] iOS mobile wallet […] its Coinbase Cloud, Coinbase Commerce APIs, Query and Transact, Participate, Delegate and Validator software, Coinbase Pay, Coinbase Wallet and Coinbase Operated Public Validators.”
The legal team added that because the patent is applicable to both proof-of-stake (PoS) and proof-of-work (PoW) blockchains, it may be possible to transfer cryptocurrency payments, services for trading, and staking on chains that use both consensus processes.
Veritaseum Capital “experienced damages as a direct and proximate effect,” according to Veritaseum, while the exchange “gained large profits by virtue of its infringement,” which was used to support the $350 million number.
The lawyers also mentioned that Veritaseum had previously warned the exchange of the alleged infringement in a letter addressed to Coinbase in July, adding:
“Defendant had prior knowledge, should have known, or at least been willfully blind of the ‘566 Patent. Defendant has been on notice of the ‘566 Patent at least as early as July 3, 2022, if not earlier from other sources or parties.”
In addition to Coinbase, additional “centralized and decentralized digital asset exchanges” may use “unlicensed proprietary IP” from Veritaseum, according to Vertiaseum’s “Coinbase: Forensic Analysis & Deep Dive” study from July.
The U.S. Patent and Trademark Office granted co-inventor Mathew Bogosian and founder of Vertiaseum Reginald “Reggie” Middleton Patent 566 on December 7, 2021, according to the court document. Vertiaseum did not specify how long Coinbase had allegedly been violating Patent 566.
Veritaseum Capital additionally asked for a jury trial to be held in the Delaware court as its preferred method of resolving the conflict.
