Categories: U.S. Regulation

Coinbase Faces New Class Action Over Alleged Securities Violations

Coinbase Global and its CEO, Brian Armstrong, are facing a class action lawsuit filed by several plaintiffs who allege the company misled customers into purchasing digital assets that qualify as securities.
According to the filing, the plaintiffs argue that cryptocurrencies such as Solana (SOL), Polygon (MATIC), Near Protocol (NEAR), Decentraland (MANA), Algorand (ALGO), Uniswap (UNI), Tezos (XTZ), and Stellar Lumens (XLM) should be recognized as securities.

The case claims Coinbase has breached securities laws by advertising these digital assets without proper registrations.

Details of the Lawsuit

The class action, initiated by plaintiffs including Gerardo Aceves, Thomas Fan, Edwin Martinez, Tiffany Smoot, Edouard Cordi, and Brett Maggard, cites intentional violations of securities laws in California and Florida. 

The suit focuses on Coinbase’s role as a “Securities Broker” as per its user agreement and its operations involving Coinbase Earn accounts. These accounts allegedly violated securities laws by promoting higher-yield investments without adequate disclosures.

In response to ongoing legal pressures, Coinbase sought to clarify the definition of “investment contract” through an interlocutory appeal following clarity from the US Court of Appeals for the Second Circuit regarding secondary crypto sales. 

This legal strategy is significant in the broader context of the ongoing Ripple vs. SEC lawsuit, which addresses similar issues concerning the classification of digital assets.

Terron Gold

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