Coinbase Refused to Distribute FLR Token as Part of Flare Network Airdrop, Class Action Claims

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A proposed class action alleges cryptocurrency exchange Coinbase Global has refused to distribute blockchain company Flare Network’s FLR and Songbird (SGB) digital currency units to XRP investors despite promising to participate in a promotional “airdrop” of the tokens to entice would-be buyers. 

The 21-page lawsuit says that while other large digital asset exchanges participated in the Flare Network airdrop and lawfully distributed FLR tokens to XRP owners via a “snapshot” on January 9, 2023, Coinbase chose not to do so and instead “unjustly converted” the assets for its own use. Per the suit, Coinbase “repeatedly” affirmed that it would participate in the Flare Network airdrop on behalf of XRP holders, and has since shared a “vague, ambiguous statement” that it “may” release the FLR to customers “sometime” before June 30 of this year. 

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According to the complaint, an airdrop occurs when a particular digital asset project deposits its newly minted token into the digital wallets of existing investors. One of the purposes of an airdrop, the case explains, is that it allows a new project to build a more robust network of users in a short amount of time. 

Flare Network is described in the complaint as a “new blockchain which presents developers with a simple and coherent stack for decentralized interoperability.” The suit says Flare Network announced that it would airdrop tokens to holders of XRP, a token native to the XRP Ledger, a blockchain network. Due to XRP’s popularity, digital asset projects have taken to airdropping their newly created tokens to XRP owners, the filing adds. 

Coinbase informed XRP holders that no action would be required from them in order to be automatically included in the Flare Network airdrop, the case claims. In reality, the lawsuit alleges, Coinbase “had no intention of distributing to its customers the FLR and SGB receive from the Flare Airdrop.” 

“Plaintiff and members of the Class, simply as customers holding XRP in Coinbase accounts, were legally entitled to the distribution of their SBG and FLR within a reasonable time, which would be no later than a few days after the airdrop for SGB and FLR occurred,” the case contends. 

The suit looks to cover all persons or entities who maintained customer accounts holding XRP with Coinbase at the time of the “snapshot” for the Flare Network airdrop. 

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