Coinbase Urges Court to Uphold Customer Asset Rights in Prime Trust Bankruptcy Case

Coinbase has submitted an amicus brief in the ongoing bankruptcy case of Prime Trust, urging the court to uphold legal protections for customer assets held by custodians.

Coinbase filed an amicus brief in the ongoing Prime Trust bankruptcy case on Monday. The crypto exchange is urging the court to uphold Uniform Commercial Code (UCC) Article 8, which ensures that assets held by custodians belong to customers and not the custodians themselves.

Both Coinbase’s and Prime Trust’s user agreements state that assets remain customer property, the filing argues. Bankruptcy should not alter these agreements or reclassify assets as part of the custodian’s estate, Coinbase said.

"We filed an amicus brief today, urging the court to apply the clear and well-established law to ensure that customer assets are not absorbed into Prime Trust’s bankruptcy proceedings," Coinbase Chief Legal Officer Paul Grewal announced on the social media platform.

The legal filing will prevent customer funds from being included in Prime Trust’s bankruptcy estate, Coinbase said. Upholding UCC Article 8 is key to maintaining trust in custodians, both in digital and traditional finance, it added.

Coinbase CLO to Testify at Operation Chokepoint 2.0 Hearing

In other legal developments, the Operation Chokepoint 2.0 hearing is drawing industry-wide attention. Coinbase CLO Paul Grewal will testify alongside other key figures, pushing back against the alleged unfair banking restrictions on crypto.

Coinbase is among the crypto exchanges that have faced scrutiny from regulators and lawmakers over the past year. The company has been defending itself against allegations of securities law violations and money laundering.

The Operation Chokepoint 2.0 hearing, which is set to take place on March 8, will examine the impact of banking restrictions on legal businesses, including crypto companies. The hearings are expected to shed light on the challenges faced by the crypto industry in accessing traditional financial services.

Legal Protections Under UCC Article 8

UCC Article 8 is a fundamental part of commercial law that protects customer assets held by custodians. It applies to both digital and traditional financial institutions, ensuring that customer funds remain separate from a custodian’s bankruptcy proceedings.

Coinbase emphasized that this legal framework applies to major financial institutions, including Bank of New York (BNY) and Depository Trust Company (DTC). The company stated that courts have historically upheld these protections to ensure market stability and customer security.

The amicus brief argues that disregarding UCC Article 8 could set a negative precedent for customer asset protections. Coinbase believes that recognizing customer ownership of assets is critical for preserving market confidence and protecting investor funds.

Trust and Security in Financial MarketsCoinbase has positioned itself as a strong advocate for customer asset protection in financial markets. The company stated that ensuring customer funds remain secure is essential for maintaining trust in custodians and financial institutions.

Paul Grewal expressed confidence in the legal precedent supporting customer asset protections. He urged the court to reinforce these protections in the Prime Trust bankruptcy case, aligning with past court rulings that have upheld UCC Article 8.

The company emphasized that its filing is not about crypto only but about broader financial principles that impact digital and traditional finance.

Coinbase Continues Global Expansion with VASP License in UKCoinbase is also making regulatory strides in key markets around the world. The crypto exchange recently secured a Virtual Asset Service Provider (VASP) license in the United Kingdom.

This license will enable Coinbase to offer expanded crypto and fiat services in the U.K. The company is now authorized to facilitate the purchase, sale, exchange, transfer, and storage of crypto assets, as well as fiat on- and off-ramps.

Coinbase is now fully licensed to operate both a crypto exchange and a fiat money transmitter business in the U.K. This marks a significant development in the company’s international strategy.

While regulatory pressures persist in some jurisdictions, Coinbase is quietly yet steadily increasing its global footprint with the necessary regulatory approvals.