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Cryptocurrency News Articles
Coinbase Hit with Class-Action Lawsuit Over Alleged Unregistered Securities Trading
May 06, 2024 at 07:52 am
Coinbase, the leading US-based crypto exchange, faces a new class-action lawsuit alleging violations of state securities laws. The complaint accuses Coinbase of offering unregistered securities, including SOL, MATIC, NEAR, MANA, ALGO, UNI, XTZ, and XLM, despite acknowledging its status as a securities broker in its user agreement. The lawsuit also targets Coinbase CEO Brian Armstrong, a prominent figure in the crypto industry.
Coinbase Faces Class-Action Lawsuit Alleging Unregistered Securities Trading
A significant class-action lawsuit has emerged against Coinbase, the prominent US-based cryptocurrency exchange, accusing the company of knowingly violating state securities laws by offering unregistered securities for trading.
The lawsuit, filed in a US district court on behalf of five plaintiffs from California and Florida, alleges that Coinbase has engaged in illegal securities trading operations since its inception. According to the complaint, Coinbase has admitted to acting as a securities broker in its user agreement, yet it has continued to offer various digital assets that are classified as unregistered securities under state law.
The specific digital assets identified as unregistered securities in the lawsuit include SOL (Solana), MATIC (Polygon), NEAR (Near Protocol), MANA (Decentraland), ALGO (Algorand), UNI (Uniswap), XTZ (Tezos), and XLM (Stellar Lumens).
The lawsuit not only targets Coinbase but also implicates its CEO and co-founder, Brian Armstrong, who is considered a leading figure in the cryptocurrency industry. The plaintiffs allege that both Coinbase and Armstrong have failed to meet their legal obligations by facilitating the trading of unregistered securities.
This class-action lawsuit adds to the mounting legal challenges facing Coinbase. In mid-2023, the US Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase for allegedly offering unregistered securities and operating an unregistered national securities exchange.
The SEC's lawsuit has drawn attention to the regulatory uncertainties surrounding the cryptocurrency industry. The SEC has asserted that many digital assets fall under the definition of securities and therefore must comply with applicable regulations.
The new class-action lawsuit against Coinbase provides further evidence in support of the SEC's claims. It remains to be seen how the SEC will utilize this new evidence in its ongoing battle against Coinbase.
The lawsuit also underscores the growing concern among regulators and policymakers regarding the potential risks associated with cryptocurrency trading. The plaintiffs allege that Coinbase has failed to adequately disclose the risks associated with trading unregistered securities, potentially exposing investors to significant losses.
The lawsuit has also had an immediate impact on Coinbase's stock price. As of the last trading session, Coinbase (Coin) fell by 2.5%. It remains to be seen whether the lawsuit will lead to further sell pressure on Coinbase's stock in the coming days and weeks.
The legal developments surrounding Coinbase and the broader cryptocurrency industry are being closely monitored by investors, regulators, and market participants alike. The outcome of these legal challenges will have significant implications for the future regulation of digital assets and the growth of the cryptocurrency industry as a whole.
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