- Coinbase Global and CEO Brian Armstrong face a class action lawsuit alleging the sale of securities.
- The lawsuit claims that SOL, MATIC, NEAR, MANA, ALGO, UNI, XTZ, and XLM are securities.
- The plaintiffs also argue that Coinbase Earn accounts violated securities laws.
A class action lawsuit has been filed against Coinbase Global and CEO Brian Armstrong, alleging the sale of securities and violation of securities laws.
Class Action Lawsuit Against Coinbase
Coinbase, a leading crypto exchange firm, is facing a class action lawsuit. The plaintiffs allege that the company misled investors into buying securities, violating California and Florida securities laws. The lawsuit argues that digital assets listed on Coinbase, including Solana (SOL), Polygon (MATIC), Near Protocol (NEAR), Decentraland (MANA), Algorand (ALGO), Uniswap (UNI), Tezos (XTZ), and Stellar Lumens (XLM), are securities.
Allegations Against Coinbase
The plaintiffs, Gerardo Aceves, Thomas Fan, Edwin Martinez, Tiffany Smoot, Edouard Cordi, and Brett Maggard, claim that Coinbase admitted to being a “Securities Broker” in its user agreement. They argue that this makes the digital asset securities sold by the exchange investment contracts or other securities. The lawsuit also alleges that Coinbase Earn accounts violated securities laws by advertising and promoting higher yields. The plaintiffs are seeking full recession, statutory damages under state law, and injunctive relief in a demand for a jury trial.
Coinbase’s Legal Dispute with the U.S. SEC
In response to the lawsuit, Coinbase has escalated its legal dispute with the U.S. Securities and Exchange Commission (SEC) by filing an interlocutory appeal on the “investment contract” definition. Paul Grewal, CLO of Coinbase, stated that the exchange has a higher chance of victory as the SEC’s interpretation of investment contracts doesn’t align with Second Circuit and Supreme Court cases. This move came after Coinbase gained major clarity in the US Court of Appeals for the Second Circuit that secondary sales of crypto are not securities as there are no investment contracts.
Conclusion
This lawsuit against Coinbase is a significant development in the crypto industry, highlighting the ongoing debate over the classification of digital assets as securities. The outcome of this case could have far-reaching implications for other crypto exchanges and digital assets. As the legal battle unfolds, investors and industry stakeholders will be closely watching the proceedings.
