Is Coinbase selling unregistered securities? That question just got a lot harder for the exchange to dodge. A U.S. federal court has ruled against Coinbase in an investor lawsuit, rejecting its argument that it is not a “statutory seller” of securities.
This decision puts the exchange in a tough spot and reignites a major debate: are cryptocurrencies actually securities?
Judge Paul Engelmayer’s ruling means Coinbase will have to face claims from investors accusing the exchange of selling at least 79 unregistered crypto securities. The court dismissed Coinbase’s defense, stating that customers trade directly with the exchange, making it a direct seller.
After the ruling, Coinbase issued a statement reaffirming that it does not list, offer, or sell securities. The exchange acknowledged the court’s decision but noted, “Today’s opinion importantly narrowed the scope of discovery in this case.” Coinbase also expressed confidence that its arguments would ultimately succeed in court.
Coinbase’s legal troubles began in 2023 when the U.S. Securities and Exchange Commission (SEC) accused it of operating an unregistered securities platform. Coinbase has strongly disputed this, arguing that crypto transactions on its platform should be classified as asset sales, not securities trades.
The exchange even took legal action against the SEC and the Federal Deposit Insurance Corporation (FDIC), claiming the agencies failed to comply with the Freedom of Information Act.
Despite its legal challenges, Coinbase remains a dominant cryptocurrency exchange. It holds a perfect trust score of 10 out of 10 and records a 24-hour trading volume of $4.6 billion, reflecting a 17.3% change in the last day. The platform supports 272 coins and 420 trading pairs, with BTC/USD being its most active, handling $1.1 billion in volume.
As the lawsuit moves forward, its outcome could have major implications for Coinbase and the broader cryptocurrency industry.
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