US court dismisses claim Coinbase sold unregistered securities
- US judge dismissed the class action lawsuit, filed in 2021, in a ruling on Wednesday.
- The lawsuit had claimed that Coinbase sold securities and bypassed disclosure rules.
- Coinbase has previously stated that the exchange does not list security tokens.
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A US judge has dismissed a lawsuit that alleged the crypto exchange Coinbase Global Inc (NASDAQ: COIN) sold unregistered securities, Reuters reported.
The class action lawsuit, filed in 2021, also claimed that Coinbase had not registered as a broker-dealer with the US Securities and Exchange Commission (SEC). The suit stated that the US-based crypto platform had thus bypassed disclosure rules aimed at protecting investors as happens with traditional securities and that the contracts the platform offered were as a result illegal.
More than that, the suit claimed that Coinbase operated as an “intermediary,” – unlike peer-to-peer platforms that match buyers and sellers – which means the exchange was the “actual seller” of the tokens. It is a setup that allows the digital assets platform to collect fees on transactions.
Coinbase wins as judge dismisses class action lawsuit
In a ruling delivered Wednesday, US District Judge Paul Engelmayer in Manhattan, New York, said that the class action lawsuit had failed to demonstrate that Coinbase had illegally sold the 79 digital assets mentioned in the suit.
The customers, who traded on Coinbase and Coinbase Pro, had not demonstrated that indeed the publicly-traded crypto company did sell or hold title to the indicated digital assets, the judge said.
Judge Engelmayer also rejected the allegations on the grounds that, although Coinbase may have touted particular tokens’ proposition value and aided airdrops, it did not have any direct role in the alleged transactions.
According to the judge, the suit failed to prove the defendants as the actual seller and he dismissed the plaintiffs’ claims with prejudice.
In July last year, the SEC filed securities fraud charges against a former Coinbase employee charged with insider trading. The agency had indicated that nine of the tokens forming part of the investigations and listed on Coinbase, were securities.
Paul Grewal, the Chief Legal Officer at Coinbase, rejected this classification. As reported by Invezz, Grewal was adamant that the exchange does not list securities.