The top US cryptocurrency exchange, Coinbase, is being sued in a second class-action complaint by investors who say they were duped into purchasing unregistered securities. The May 2024 lawsuit continues earlier grievances against the exchange’s business plan. The way authorities categorize particular digital assets is fundamental to the problem. The plaintiffs contend that under US law, several tokens listed on Coinbase, such as Uniswap (UNI) and Solana (SOL), are securities. Securities must be documented with the Securities and Exchange Commission (SEC) to ensure investor safety through disclosures and regulations.
According to the lawsuit, Coinbase misled investors and broke state securities laws by selling these unregistered securities. The plaintiffs further contend that Coinbase’s user agreement’s mention of the company functioning as a “Securities Broker” supports their position. They ask for monetary damages for lost investments and a court injunction stopping Coinbase from carrying out these actions.
Coinbase has not yet publicly responded to this most recent case. The exchange has previously insisted that user-to-user trades in cryptocurrency on the secondary market, which do not meet the requirements for being considered security transactions, are not under the jurisdiction of the SEC.
Six individual investors—California and Florida citizens Geraldo Aceves, Thomas Fan, Edwin Martinez, Tiffany Smoot, Edouard Cordi, and Brett Maggard—are the leading plaintiffs in this recent action. The case has been assigned to the San Francisco Division of the United States District Court for the Northern District of California.
$COIN is facing a new class-action lawsuit for alleged investor deception.
— @TheLordofEntry (@thelordofentry) May 5, 2024
– Plaintiffs argue the exchange's business model is illegal and accuse Coinbase of selling unregistered securities.
– Cryptocurrencies cited include Solana, Polygon, Near Protocol, Decentraland,… pic.twitter.com/NYpVeND5Gf
In addition to statutory damages under California law, the plaintiffs are requesting complete rescission and injunctive remedies through a jury trial.
Another Coinbase Class Action Lawsuit
Regarding security classification, Coinbase has already encountered legal issues. A 2022 lawsuit alleges that 79 tokens were securities that were not registered. The lawsuit claims that some of Coinbase’s listed tokens, including Uniswap, Tezos, Stellar Lumens, Decentraland, Near Protocol, Solana, Polygon, and Algorand, are illegally listed on the exchange since they are deemed securities.
The lawsuit also alleges that the exchange classified the digital assets it distributes as securities or investment contracts by recognizing in its user agreement that it was a “securities broker.” The lawsuit also claims that Coinbase Prime, an institutional client-focused platform, is a securities broker.
