The American cryptocurrency exchange, Coinbase, is embroiled in yet another class-action lawsuit. This lawsuit alleges that investors were misled into purchasing tokens classified as unregistered securities. Filed last Friday, the class action also contends that the exchange’s business model is unlawful.
Another Class Action Against Coinbase
According to the lawsuit, Coinbase's listed tokens—such as Solana, Polygon, Near Protocol, Decentraland, Algorand, Uniswap, Tezos, and Stellar Lumens—are considered securities, rendering their listings on the exchange illegal.
The lawsuit further claims that in its user agreement, the exchange acknowledged its role as a “securities broker,” thereby categorizing the digital assets it offers as investment contracts or securities. Additionally, the lawsuit states that Coinbase Prime, the platform dedicated to institutional clients, also operates as a securities broker.
$COIN is facing a new class-action lawsuit for alleged investor deception.- 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
— @TheLordofEntry (@thelordofentry) May 5, 2024
This latest lawsuit is among several class actions the San Francisco-based company has faced in recent years. A similar lawsuit filed in 2022 also claimed the exchange listed 79 tokens as unregistered securities.
The primary plaintiffs in this recent lawsuit are six individual investors—Gerardo Aceves, Thomas Fan, Edwin Martinez, Tiffany Smoot, Edouard Cordi, and Brett Maggard, residents of California and Florida. The case has been filed at the United States District Court for the Northern District of California, San Francisco Division.
The plaintiffs are seeking full rescission, statutory damages under state law, and injunctive relief via a jury trial.
Coinbase’s Legal Troubles
Coinbase is also contending with charges from the U.S. Securities and Exchange Commission (SEC), which accuses the exchange of operating as an illegal trading platform by offering unregistered crypto asset securities. The regulatory lawsuit also alleges that the platform acts as an exchange, brokerage, and clearing agency—distinct roles under current U.S. laws—without the necessary registrations.
In response, Coinbase has counter-sued the SEC, demanding clear regulations for the cryptocurrency industry. Moreover, Consensys, the company behind Metamask, recently sued the SEC, aiming to establish Ether as a non-security and to challenge the regulator's ambiguous authority over the Ethereum blockchain.
This article was written by Arnab Shome at www.financemagnates.com.
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