Coinbase Customers Claim Illegal Securities Sales, File Class Action Lawsuit

Zinger Key Points
  • The lawsuit accuses Coinbase and its CEO of violating state and federal securities laws.
  • Plaintiffs demand rescission and statutory damages, highlighting Coinbase’s lack of necessary broker-dealer registrations.

Six Coinbase COIN customers have initiated a class action lawsuit against the cryptocurrency exchange, accusing it of operating illegally by selling what they claim are unregistered securities.

What Happened: Filed in the Northern District of California, the complaint names Coinbase Global, Inc., along with several subsidiaries, and CEO Brian Armstrong as defendants.

Benzinga has reached out to Coinbase for a comment.

The plaintiffs, identified as Gerardo Aceves, Thomas Fan, Edwin Martinez, Tiffany Smoot, Edouard Cordi, and Brett Maggard, allege that Coinbase has violated both state and federal securities laws by not registering the digital assets it offers on its platform.

They argue that Coinbase has acknowledged in its user agreements that it acts as a securities broker and that the assets it deals with are investment securities.

Also Read: Bitcoin’s ‘Clock Is Ticking’: Why Edward Snowden Issues ‘Final Warning’

Furthermore, the lawsuit accuses Coinbase of misleading its customers regarding the regulatory compliance of its operations, emphasizing that while Coinbase claims to be regulated, it lacks the necessary broker-dealer registrations.

The legal action seeks recission, statutory damages, and injunctive relief, urging a thorough judicial review of Coinbase's business practices.

What’s Next: This legal development could be of particular interest to attendees and observers of Benzinga’s upcoming Future of Digital Assets event, highlighting ongoing regulatory challenges and compliance issues faced by platforms operating within the digital asset space.

Read Next: Bitcoin Market In Distribution: Are We Nearing A Bottom?

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