Coinbase, the popular cryptocurrency exchange, finds itself embroiled in another legal dispute as customers filed a class-action lawsuit on Friday. The lawsuit targets two of Coinbase's subsidiaries, Coinbase Global and Coinbase Asset Management, alleging repeated violations of securities laws dating back to the exchange's inception.
Coinbase Lawsuit Unveils Alleged Contradictions in Crypto Asset Classification
The lawsuit highlights contradictions within Coinbase's user agreement, alleging that while the exchange identifies certain crypto assets as securities, it fails to register them for sale. Furthermore, the lawsuit claims that Coinbase openly acknowledges its role as a "securities broker" and "securities intermediary."
Specific digital assets listed on Coinbase, including Algorand (ALGO), Decentraland (MANA), Polygon (MATIC), Near Protocol (NEAR), Uniswap (UNI), and Solana (SOL), are singled out as "digital asset securities" in the lawsuit.
The lawsuit alleges that Coinbase's failure to disclose vital information contributed to deceptive marketing practices, pressuring customers into purchasing digital asset securities on the platform.
Coinbase's Response
A Coinbase spokesperson dismissed the allegations as "legally baseless," expressing confidence in the judicial process and readiness to address the claims in due course.
Coinbase's Legal Entanglements: SEC Clash over Staking Program and Securities Laws
Coinbase is already entangled in a separate legal battle with the SEC over allegations of violating securities laws through its staking program. While the SEC lawsuit does not target Coinbase executives, the exchange contests the classification of secondary sales of crypto assets as securities. Coinbase has appealed a recent decision by a judge allowing the SEC lawsuit to proceed.
The class-action lawsuit against Coinbase underscores the legal challenges facing the exchange amidst increasing scrutiny over its compliance with securities regulations. As Coinbase navigates these legal battles, the outcomes could have significant implications for the broader cryptocurrency industry's regulatory landscape.