Coinbase Facing Another Lawsuit Over Alleged Security Violations

Crypto exchange giant Coinbase is facing yet another class-action lawsuit. A group of individual plaintiffs accuses the company of misleading investors into buying unregistered securities. The complaint alleges that Coinbase has violated securities laws.

The lawsuit argues that several cryptocurrencies listed on Coinbase’s platform, including Solana (SOL), Polygon (MATIC), Near Protocol (NEAR), Decentraland (MANA), Algorand (ALGO), Uniswap (UNI), Tezos (XTZ), and Stellar Lumens (XLM), are securities and should have been registered as such.

Gerardo Aceves, Thomas Fan, Edwin Martinez, Tiffany Smoot, Edouard Cordi, and Brett Maggard brought the class-action suit against Coinbase Global and its CEO, Brian Armstrong. The court filing alleges that Coinbase intentionally and repeatedly violated California and Florida securities laws.

The plaintiffs claim that Exchange admitted to being a “Securities Broker” in its user agreement, making the digital assets it offers investment contracts or securities. The lawsuit also targets Coinbase’s prime brokerage service, alleging it acts as a securities broker/dealer.

Furthermore, the plaintiffs assert that Coinbase Earn accounts violated securities laws by advertising and promoting higher yields. They seek full rescission, statutory damages under state laws, and injunctive relief in a demand for a jury trial. This lawsuit is similar to other class actions and the SEC’s lawsuit against Coinbase.

Coinbase Seeks Clarity On Investment Contract Definition

In response, Coinbase has escalated its legal dispute with the U.S. Securities and Exchange Commission (SEC) by filing an interlocutory appeal on the definition of an “investment contract.”

Paul Grewal, Coinbase’s Chief Legal Officer, stated that the exchange has a higher chance of victory as the SEC’s interpretation of investment contracts does not align with Second Circuit and Supreme Court cases. This move comes after Coinbase gained significant clarity from the U.S. Court of Appeals for the Second Circuit, which ruled that secondary crypto sales are not securities as there are no investment contracts.

Coinbase’s interlocutory appeal is critical for the ongoing Ripple vs. SEC lawsuit. The SEC could appeal Judge Torres’ ruling that programmatic sales of XRP are not securities.

Related Reading | Elon Musk Unveils Powerful Tool to Combat Deepfakes on X

Furthermore, the author’s views are for reference only and shall not constitute investment advice. Before purchasing, please ensure you fully understand and assess the products and associated risks.

Comments (No)

Leave a Reply