Coinbase is facing a new legal challenge as customers filed a class-action lawsuit accusing its subsidiaries, Coinbase Global and Coinbase Asset Management, of repeatedly violating securities laws since the exchange’s inception. The lawsuit highlights contradictions in Coinbase’s user agreement, alleging that while certain crypto assets are identified as securities, Coinbase never registered them for sale.
The lawsuit specifically identifies digital assets listed on Coinbase as “digital asset securities,” including Algorand, Decentraland, Polygon, Near Protocol, Uniswap, and Solana. It alleges that Coinbase knowingly failed to register these securities as required by state law.
The lawsuit alleges that Coinbase’s failure to disclose key information and its classification of digital assets as securities amplified deceptive marketing tactics. These tactics purportedly pressured customers into purchasing digital asset securities on Coinbase. The plaintiffs claim that Coinbase recognized the impact of classifying digital assets as securities but chose not to register them.
A Coinbase spokesperson dismissed the claims in the litigation as “legally baseless” and expressed confidence in addressing them through the judicial process. Coinbase maintains that it has not sold unregistered securities and intends to defend itself against the allegations.
Coinbase is already involved in a separate lawsuit with the SEC, which accuses the exchange of violating securities laws through its staking program. The SEC’s lawsuit targeted Coinbase but did not implicate any executives. Coinbase contends that secondary sales of crypto assets do not qualify as securities and has appealed a judge’s decision allowing the SEC lawsuit to proceed.
The class-action lawsuit adds to Coinbase’s legal challenges, including its ongoing dispute with the SEC. As the legal proceedings unfold, the outcomes will likely have significant implications for Coinbase’s operations and the broader regulatory landscape of the crypto industry.
