Coinbase is currently facing serious allegations of violating securities laws, according to individual complainants. These complainants claim that Coinbase intentionally disregarded securities laws and deceived investors into purchasing securities. In response to these allegations, a class action lawsuit has been filed against Coinbase and its CEO, Brian Armstrong, by five plaintiffs.
The complainants argue that Coinbase knowingly and persistently violated securities laws in California and Florida. They point out that Coinbase explicitly identified itself as a “Securities Broker” in its user agreement, indicating that the exchange sells digital assets as securities in addition to other investment products. The complaint also targets Coinbase’s prime brokerage services, alleging that they too violated securities laws.
Moreover, the complainants assert that Coinbase Earn accounts violated securities laws by promising higher returns to investors. They are seeking injunctive relief, statutory damages under state law, and full recession through a jury trial.
This case bears similarities to previous complaints filed by the SEC and other class actions against Coinbase. The concept of “investment contracts” is a central issue in Coinbase’s ongoing legal battle with the SEC. Coinbase’s Chief Legal Officer, Paul Grewal, believes that the company has a stronger chance of winning due to conflicting interpretations of investment contracts between the SEC, the Second Circuit, and the Supreme Court.
Coinbase received significant clarification from the US Court of Appeals for the Second Circuit, which stated that secondary transactions involving cryptocurrencies do not qualify as securities due to the absence of investment contracts. This clarification has prompted Coinbase to take certain actions.
In other news, Tesla has recently announced that it will accept Dogecoin as payment for specific items, leading to a rally in the price of DOGE.
