Outside Source
Coinbase said the judge’s opinion “narrowed the scope of discovery in this case,” adding, “We look forward to vindicating the remaining claims” in court.
News
A US federal judge has rejected Coinbase’s argument that it does not meet the definition of a “statutory seller” under federal law, forcing the cryptocurrency exchange to face an investor lawsuit in the state of New York.
According to a Feb. 7 Reuters report, US District Judge Paul Engelmayer has compelled Coinbase to face plaintiffs’ allegations that it sold securities without registering as a broker-dealer. Specifically, the plaintiffs accused Coinbase of selling 79 cryptocurrencies that were securities without proper registration.
As Cointelegraph reported, the class-action lawsuit was initially dismissed in the District Court of Southern New York in February 2023. However, the Circuit Court of Appeals revived parts of the lawsuit more than one year later.
As Reuters reported, Judge Engelmayer said that “customers on Coinbase transact solely with Coinbase itself,” which suggests that the exchange was a seller.
In a written response to Cointelegraph, a Coinbase spokesperson said:
“Coinbase does not list, offer or sell securities on its exchange. Today’s opinion importantly narrowed the scope of discovery in this case, which is significant. We look forward to vindicating the remaining claims in the district court.”
Related: Coinbase CEO: Future stablecoin regs likely to demand full US Treasury backing
Ongoing lawsuit with the SEC
Coinbase has been mired in a lawsuit with the US Securities and Exchange Commission since June 2023, when the regulator accused the exchange of operating an unregistered securities platform and failing to register as a broker.
In January, Coinbase asked a US appeals court to rule that cryptocurrency trades are not securities. In the filing, Coinbase argued that trades facilitated on its platform should not be classified as securities trades “but asset sales of digital assets rather than physical ones.”
A portion of Coinbase’s petition to the Second Circuit Court of Appeals. Source: Bloomberg Law
Coinbase has also sued the SEC and Federal Deposit Insurance Corporation for allegedly attempting to “cut off digital-asset firms from essential banking services.” The exchange also alleged that both agencies failed to comply with Freedom of Information Act requests.
Source: Paul Grewal
Coinbase plays a major role in the US cryptocurrency market. It’s not only the country’s largest crypto exchange by trading volume but is also the largest custodian for the US spot Bitcoin (BTC) exchange-traded funds.
X Hall of Flame: Coinbase ‘is going to win’ says MetaLawMan
This article first appeared at Cointelegraph.com News
