Blockchain Firm Sues Coinbase For $350 Million Alleging Patent Infringement

Cryptocurrency exchange Coinbase has been embroiled in a legal battle with blockchain-based software company Veritaseum Capital after it was accused of infringing on patents related to its blockchain technology. It is currently seeking $350 million in damages.

Veritaseum alleges Coinbase has infringed a patent for cryptocurrency payment transfer technology known as the “566 patent,” according to a lawsuit filed Thursday in federal district court in Delaware by U.S. law firm Brandage & Stanger. ing.

Veritaseum said the patent revolves around “new devices, systems and methods” that allow the parties to “enforce value transfer agreements” with “little or no reliance” on each other. and Coinbase claims to have used it for many of its blockchain infrastructure services.

“Defendant’s infringing conduct includes, but is not limited to, its website. […] Coinbase Android Mobile Wallet […] iOS mobile wallet […] Coinbase Cloud, Coinbase Commerce API, Query and Transact, Participate, Delegate, Validator Software, Coinbase Pay, Coinbase Wallet, and Coinbase Operated Public Validators.

The law firm also states that the patent is applicable to Proof of Stake (PoS) and Proof of Work (PoW) blockchains, allowing cryptocurrency payments, on-chains supported by these consensus mechanisms, It explained that it may enable the transfer of trading, and staking services.

Furthering my many warnings about the risks of inadequate due diligence, our lawsuit includes infringement of patent claims covering PoS and PoW Ethereum, NFT and Bitcoin transfers. This is public information since 2015 and I’ve been tweeting publicly for almost a year. No one should be surprised! https://t.co/MjuJSvYBrc

— Reggie Middleton DeFi Patent US11196566, JP6813477 (@ReggieMiddleton) September 22, 2022

Veritaseum justifies the $350 million figure, claiming that Coinbase “gained substantial profits from its breach” and that Veritaseum Capital “maintained damages as a direct and approximate result.” did.

The attorney also noted that Veritaseum had sent Coinbase a letter in July warning of the alleged breach, adding:

“Defendant knew, should have known, or at least was willfully ignorant of the ‘566 patent. but not earlier than notifications from other sources or parties.”

“Coinbase: Forensic Analysis & Deep Dive” at Vertiaseum in July report It suggests that there may be other “centralized and decentralized digital asset exchanges” that adopt “unlicensed patented IP” from Veritaseum in addition to Coinbase.

Related: Coinbase Hit With Two New Lawsuits During SEC Investigation

Patent 566 was awarded by the U.S. Patent and Trademark Office on December 7, 2021 to Vertiaseum founder Reginald ‘Reggie’ Middleton and co-inventor Mathew Bogosian, according to court documents. Using patent 566.

Veritaseum Capital also requested a jury trial in a Delaware-based court as the preferred means of resolving the dispute.

Cointelegraph reached out to Coinbase for comment, but did not immediately receive a response by the time of publication.