Cryptocurrency exchange Coinbase and its CEO, Brian Armstrong, are facing a new lawsuit from a group of plaintiffs from California and Florida, alleging they were duped into purchasing unregistered securities.
This is not the first of the legal hurdles faced by Coinbase following the lawsuit filed by the United States Securities and Exchange Commission (SEC) in mid-2023.
Lawsuit alleges Coinbase sold unregistered securities
The new class action was deposit in the United States District Court for the Northern District of California, San Francisco Division. The plaintiffs include Gerardo Aceves, Thomas Fan, Edwin Martinez, Tiffany Smoot, Edouard Cordi and Brett Maggard.
The lawsuit claims that the Coinbase exchange acknowledged in its user agreement that it operated as a securities broker-dealer. Additionally, the plaintiffs claimed that the Coinbase Prime brokerage was presented as a securities broker.
However, despite this recognition, it has continued to provide access to assets such as Solana (SOL), Polygon (MATIC), Near Protocol (NEAR), Decentraland (MANA), Algorand (ALGO), Uniswap (UNI), Tezos ( XTZ). , and Stellar Lumen (XLM), which the lawsuit says are unregistered securities.
The plaintiffs seek a full reversal, statutory damages under state law and an injunction via jury trial.
Coinbase faces legal battles on multiple fronts
This recent lawsuit differs from the widely discussed legal dispute between Coinbase and the SEC, which also raises questions about whether tokens offered on exchanges should be classified as securities. Notably, the firm recently filed an interlocutory appeal in response to a judge's ruling allowing the case to proceed.
John Deaton, a cryptocurrency lawyer currently engaged in an election campaign to challenge Senator Elizabeth Warren, recently came out in support of Coinbase.
In an April 26 submission to the U.S. District Court for the Southern District of New York, Deaton submitted an amicus brief approving a motion for interlocutory appeal on behalf of 4,701 Coinbase customers.
In another case, numerous Coinbase customers filed a lawsuit against the company over its management of the GYEN stablecoin, which they claimed was anything but stable. According to this lawsuit, Coinbase actively promoted and traded the GYEN token despite its high volatility, resulting in significant losses for investors.
Additionally, Coinbase’s crypto staking has sparked regulatory concerns. The SEC contends that this is an unregistered investment contract and guarantee. Several U.S. states have joined the SEC's lawsuit, alleging that Coinbase violated securities laws in connection with its staking rewards program.
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