Coinbase Chief Legal Officer (CLO) Paul Grewal confirmed the New York lawsuit, BeInCrypto reported earlier, indicating that it indeed relates to prediction markets.
“About the NY lawsuit news – prediction markets are federally regulated national exchanges, registered with the CFTC. This issue is proceeding in New York federal court as we speak. Coinbase will continue to fight for the federal oversight of these markets that Congress intended,” wrote Grewal in a post.
The following section constitutes the initial reporting when the news first broke.
New York filed lawsuits against Coinbase Financial Markets and Gemini Titan for allegedly violating state law, according to court records first reported by Reuters.
While copies of the complaints may not immediately available, speculation is that the suits target the prediction market subsidiaries of two of the largest US crypto exchanges. If so, it would mark the first enforcement action by New York against federally licensed prediction market operators.
Has New York Followed Through on Prediction Market Warning?
New York Attorney General Letitia James warned in February that prediction markets violate the state’s gambling statutes. At the time, her office issued a consumer and industry alert stating that “the conduct, advertisement, and promotion of unlicensed sports wagering violate New York’s gambling laws.”
Coinbase launched its prediction market product for US users in January through a partnership with Kalshi.
Gemini Titan, a subsidiary of Gemini Space Station, separately rolled out its own prediction market platform after obtaining a Designated Contract Market license from the Commodity Futures Trading Commission (CFTC).
The lawsuits come as prediction markets face a growing legal battle between state gambling regulators and the federal government.
The CFTC sued Connecticut, Arizona, and Illinois on April 3 for attempting to regulate prediction market operators under state gaming laws.
A federal appeals court also ruled on April 7 that New Jersey could not enforce its gambling statutes against Kalshi.
New York’s speculated decision to sue rather than comply with federal preemption arguments signals the jurisdictional dispute may accelerate toward the Supreme Court.
Reportedly, a circuit split is forming, a condition that typically invites high court review.
