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Coinbase’s legal problems worsen over alleged fraud

It will be crucial for Coinbase to be transparent, work with regulators and provide adequate support to affected customers to regain the trust of the cryptocurrency community.

Date: 2024-05-06 Author: Łukasz Michałek
Coinbase’s legal problems worsen over alleged fraud

Coinbase is facing a new legal battle after customers filed a class action lawsuit on Friday. The suit alleges that two subsidiaries of the exchange – Coinbase Global and Coinbase Asset Management – have repeatedly violated securities laws since Coinbase began operations.

The lawsuit points to some contradictions in Coinbase’s user agreement. While identifying some crypto assets as securities, Coinbase never registered them for sale, it claims.

In addition, the lawsuit alleges that Coinbase admits to acting as a “securities broker” and “securities intermediary.”

It also details several digital assets listed on Coinbase as “digital asset securities.” These include Algorand (ALGO), Decentraland (MANA), Polygon (MATIC), Near Protocol (NEAR), Uniswap (UNI) and Solana (SOL).

The lawsuit focuses on incomplete information

“Coinbase recognized early on the significant impact that the classification of digital assets as securities would have on the operation of Coinbase’s digital asset platforms.” – the lawsuit states. “And for this reason, I chose or was knowingly blindsided by the decision not to register securities, persons or brokers as required by state law.”

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It is alleged that the stock exchange’s failure to disclose key information has reinforced deceptive marketing tactics. The tactics, the lawsuit claims, were aimed at pressuring customers to buy digital securities from Coinbase.

A Coinbase spokesperson told Cryptonews that “the claims in this litigation are legally baseless.”

“We have full confidence in the legal process and look forward to fully addressing it in due course,” they added.

Coinbase denies selling unregistered securities and vows legal battle

Coinbase is already embroiled in a separate lawsuit with the SEC, which accuses the exchange of violating securities laws. The regulator has specifically charged Coinbase with offering and selling unregistered securities as part of a staking scheme. It is worth noting that in its lawsuit, the SEC did not target any of Coinbase’s directors.

The exchange maintains that secondary sales of crypto assets do not qualify as securities. The exchange has appealed the judge’s recent decision allowing the SEC’s lawsuit to proceed.

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Łukasz Michałek
Łukasz Michałek
Founder of the rapidly developing cryptocurrency channel "Biblia Kryptowalut" on YouTube. He also co-creates the Arena Trading group with Marek. Łukasz is fascinated and passionate about blockchain technology and cryptocurrencies, which constitute the central element of his activity in the cryptocurrency industry.
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