- Coinbase is facing allegations of securities law violations from individual complainants.
- The exchange is alleged by the complainants to have willfully disregarded securities laws.
Another class action complaint has been filed against cryptocurrency exchange Coinbase, claiming that the exchange deceived investors into buying securities. Coinbase is facing allegations of securities law violations from individual complainants who have filed a formal complaint.
The complaint also claims that SOL, MATIC, NEAR, MANA, ALGO, UNI, XTZ, and XLM are securities. A class action lawsuit has been filed against Coinbase Global and its CEO, Brian Armstrong, by five plaintiffs.
Securities Claim
Coinbase is alleged by the complainants to have willfully and persistently disregarded securities laws of the states of California and Florida. According to their claims, Coinbase acknowledged its status as a “Securities Broker” in its user agreement, which means that the exchange sells digital assets as securities alongside investment contracts and other products. As a securities broker/dealer, the complaint also targeted Coinbase prime brokerage.
Also, by promising bigger returns, Coinbase Earn accounts broke securities laws, according to their claims. In their demand for a jury trial, the plaintiffs are seeking injunctive relief, statutory damages under state law, and full recession. This case is very much like the SEC complaint and other class actions.
The “investment contract” concept was the subject of Coinbase’s interlocutory appeal, which further aggravated the company’s legal battle with the United States SEC.
Since the SEC’s view of investment contracts conflicts with decisions made by the Second Circuit and the Supreme Court, Coinbase CLO Paul Grewal said that the exchange has a better chance of winning. The US Court of Appeals for the Second Circuit provided Coinbase with significant clarification that secondary transactions of crypto are not securities due to the lack of investment contracts, prompting the company to take these actions.
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