Key Takeaways:
- Legal Action: Coinbase faces a class-action lawsuit alleging misleading investors by selling digital assets considered securities, including tokens like Solana and Polygon, without adhering to securities laws.
- Securities Dispute: The lawsuit claims Coinbase described itself as a “Securities Broker” in its user agreement, suggesting it operates as a brokerage service for securities through Coinbase Prime.
- Company Performance Amidst Legal Issues: Despite ongoing legal challenges, including debates with the U.S. SEC over the nature of crypto transactions, Coinbase reported strong financial results in the first quarter of 2024 with significant revenue and net income.
Coinbase, along with its CEO Brian Armstrong, is now embroiled in a class-action lawsuit.
The suit accuses the crypto exchange of misleading investors by selling them what are alleged to be securities, suggesting a breach of state securities laws since its inception.
Coinbase faces copycat class action suit asserting tokens are securities in echo of pending case https://t.co/vQ1FYPBItJ
— The Block (@TheBlock__) May 4, 2024
Filed in the United States District Court for the Northern District of California, San Francisco Division, the lawsuit represents plaintiffs from California and Florida.
These plaintiffs allege that Coinbase knowingly sold digital assets in violation of securities laws.
The tokens in question include Solana (SOL), Polygon (MATIC), Near Protocol (NEAR), Decentraland (MANA), Algorand (ALGO), Uniswap (UNI), Tezos (XTZ), and Stellar Lumens (XLM).
Coinbase and its CEO Brian Armstrong face a new class-action lawsuit alleging that Coinbase admitted in its user agreement that it was a securities broker, but offered SOL, MATIC, NEAR, MANA, ALGO, UNI, XTZ, and XLM as illegal securities. https://t.co/ML4zJT1MWl
— Wu Blockchain (@WuBlockchain) May 5, 2024
According to the lawsuit, Coinbase’s user agreement even describes the platform as a “Securities Broker,” implying that the digital assets sold are considered investment contracts or securities.
Furthermore, the lawsuit highlights that Coinbase Prime operates as a brokerage service for these securities.
The plaintiffs are seeking a complete rescission of their purchases, statutory damages under state law, and injunctive relief, requesting a jury trial to deliberate these claims.
Class Action Lawsuit Claims #Coinbase Operates as Unregistered Broker https://t.co/nlvPiXletl
— Bitcoin.com News (@BTCTN) May 5, 2024
This lawsuit echoes previous class-action cases that have accused Coinbase of similar consumer harm through the sale of securities.
In a contrasting argument, Coinbase maintains that the secondary sales of crypto assets do not fulfill the criteria for securities transactions, and has consistently challenged the applicability of securities laws to these sales.
BREAKING🚨: Coinbase faces new lawsuit over alleged investor deception.
— Ryuushi (@_electronicCash) May 5, 2024
– Brought by individual complainants- Claims ALGO, MANA, MATIC, NEAR, UNI, SOL, XLM & XTZ are securities, which complainants invested in due to alleged misleading statements by Coinbase.
– Claims they lost… pic.twitter.com/MAYtJS6pfG
This legal challenge is separate from another notable lawsuit involving Coinbase and the U.S. Securities and Exchange Commission, which also debates whether tokens sold on Coinbase are securities.
About The Author
Fleming Airunugba, a seasoned Web3 and crypto content expert, leverages his deep understanding of blockchain technology to bring the latest and most impactful news to the crypto community.
With a knack for engaging storytelling and strategic content creation, Fleming is dedicated to educating and inspiring his audience with insightful analysis on cryptocurrencies, NFTs, and the future of digital finance.
Check Fleming out on: