Coinbase to face customer lawsuit over unregistered securities sales
Investing.com -- Cryptocurrency exchange Coinbase (NASDAQ: COIN ) has been ordered to face a lawsuit filed by its customers. The lawsuit accuses the company of illegally selling securities without the necessary broker-dealer registration. The ruling was made by U.S. District Judge Paul Engelmayer in Manhattan on Friday.
Coinbase had previously argued that it did not qualify as a "statutory seller" under federal securities law. This was because it did not pass the title of 79 tokens that were traded by the customers. However, Judge Engelmayer rejected this argument. He pointed to the accusation that "customers on Coinbase transact solely with Coinbase itself," which led him to conclude that Coinbase was indeed a seller.
The judge also refused to dismiss claims under the laws of California, Florida, and New Jersey. He stated that customers had adequately alleged that Coinbase was a direct seller of the tokens.
In response to the ruling, Coinbase stated, "Coinbase does not list, offer, or sell securities on its exchange. We look forward to vindicating the remaining claims in the district court."
The lawsuit had been previously dismissed by Judge Engelmayer in February 2023, but the 2nd U.S. Circuit Court of Appeals in Manhattan revived parts of it in April. Friday's decision permits these parts to proceed. The customers are seeking unspecified damages.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.