YEREVAN (CoinChapter.com) — A U.S. federal judge ruled that Coinbase must face a lawsuit over allegations of selling unregistered securities. The court rejected Coinbase’s argument that it does not meet the definition of a “statutory seller” under federal law.
According to a Feb. 7 Reuters report, U.S. District Judge Paul Engelmayer ruled that Coinbase directly transacts with customers, making it a seller under the law. The lawsuit claims Coinbase sold 79 cryptocurrencies classified as securities without proper registration.
This case was initially dismissed in February 2023 by the District Court of Southern New York but was later revived by the Circuit Court of Appeals. The judge’s ruling allows investors to move forward with their claims that Coinbase violated securities laws.
Coinbase Denies Selling Securities
A Coinbase spokesperson responded to the ruling, emphasizing that the company does not offer or sell securities.
“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,” the spokesperson said in a statement.
Despite the lawsuit, Coinbase maintains that its platform operates legally and does not classify cryptocurrency transactions as securities sales.
SEC Lawsuit Against Coinbase Moves Forward
Coinbase also faces a separate lawsuit from the U.S. Securities and Exchange Commission (SEC). In June 2023, the SEC sued Coinbase, accusing it of running an unregistered securities exchange and failing to register as a broker.
SEC Digital Asset Regulation Scope. Source: Court FilingIn January 2024, Coinbase filed an appeal, asking a U.S. court to rule that cryptocurrency transactions on its platform are not securities trades. The company argued that digital assets sold on its exchange should be classified as asset sales, not securities transactions.
Coinbase Sues SEC and FDIC Over Crypto Regulations
Coinbase has also filed lawsuits against the SEC and the Federal Deposit Insurance Corporation (FDIC). The exchange claims these agencies attempted to block digital-asset firms from banking services and refused to comply with Freedom of Information Act (FOIA) requests.
Paul Grewal FOIA Complaint Update. Source: XAs the largest U.S. cryptocurrency exchange, Coinbase plays a major role in the crypto industry. The company is also the largest custodian for U.S. spot Bitcoin exchange-traded funds (ETFs).
Legal Battles Could Impact U.S. Crypto Market
The lawsuits involving Coinbase could reshape how cryptocurrency exchanges operate in the U.S. Courts are examining whether digital assets traded on these platforms qualify as securities, which could subject them to stricter SEC regulations.
A ruling against Coinbase may require exchanges to register as broker-dealers or modify their operations, potentially increasing compliance costs and restricting the listing of certain tokens. This could set a legal precedent impacting other crypto platforms, leading to broader enforcement actions.
For users, these decisions may affect access to specific digital tokens and how they are traded, while offering long-awaited clarity on the legal status of cryptocurrencies within the multi-trillion-dollar market.
The post Coinbase Faces Lawsuit Over Unregistered Securities Sales first appeared on Coinchapter.
The post Coinbase Faces Lawsuit Over Unregistered Securities Sales appeared first on Coinchapter.
