A group of investors has filed a class-action lawsuit against Coinbase, the popular US-based cryptocurrency exchange. They allege that the company has been offering and selling unregistered securities and investments to its customers.
The lawsuit was filed in the Northern District of California. It names Coinbase Global Inc. and its CEO, Brian Armstrong, defendants.
The Plaintiffs Allege Some Available Tokens on Coinbase as Securities
The plaintiffs allege that Coinbase has operated as an unlicensed broker-dealer since its inception. They also claim it has been offering and selling a wide range of digital assets, considered securities under California law.
The lawsuit lists an extensive list of tokens that are considered digital securities. This includes Algorand (ALGO), Near Protocol (NEAR), Polygon (MATIC), Uniswap (UNI), Solana (SOL), and many others.
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Furthermore, the plaintiffs allege that Coinbase “knowingly and willfully” violated California securities laws by failing to register as a broker-dealer and register the securities it offered. Moreover, they claim that Coinbase actively promoted these digital assets through its website, social media, and traditional advertising. Even Super Bowl ads were used to encourage customers to invest in them.
“No use case other than investing was ever offered by Coinbase to the Plaintiffs or the Class (there is no other use case for them) and Coinbase to this day continues to disseminate similar investment bulletins and updates to the Plaintiffs and Class Members. Indeed, the Coinbase website posts a ‘Weekly Market Commentary,’ and as of April 15, 2024, Coinbase still advises that ‘Investors have several ways to gain exposure to the [investment in crypto],’” according to the complaint.
The lawsuit aims for full rescission of all digital asset transactions conducted on the Coinbase platform. Additionally, it calls for injunctive relief and statutory damages.
Notably, this lawsuit comes after the US Securities and Exchange Commission (SEC) took legal action against Coinbase last year. The commission alleges that Coinbase has engaged in selling unregistered securities. The situation escalated in March 2024 when the court rejected Coinbase’s attempt to dismiss the lawsuit, positioning the SEC favorably in this ongoing legal battle.
This new development could have serious repercussions for Coinbase and the crypto industry in general. Coinbase could face significant penalties and damages if found guilty of selling unregistered securities. Additionally, this case could set an important precedent for cryptocurrency regulation in the United States.
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It is important to note that the allegations in this lawsuit are just accusations. The crypto exchange has yet to have the opportunity to defend itself in court. However, this lawsuit is a significant challenge for the company and could significantly impact its future.
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