Revived Lawsuit Against Coinbase Sparks Legal Battle
Customers’ Lawsuit Revived
A federal appeals court in New York has reinstated a lawsuit filed by customers of Coinbase, alleging that the cryptocurrency exchange engaged in illegal activities. The customers accused Coinbase of selling unregistered securities and operating as an unregistered broker-dealer.
Appeals Court Decision
The 2nd U.S. Circuit Court of Appeals ruled that a lower court judge erred in dismissing the case based on a user agreement from December 2021. The court noted that Coinbase had made significant changes to its user agreements over time, rendering the December 2021 version inconclusive for evaluating the customers’ claims.
Customer Claims
The customers argued that they never accepted the December 2021 user agreement, making it irrelevant to their case. They also contended that Coinbase had distributed free tokens and promoted tokens’ value proposition, despite not directly engaging in transactions.
Legal Battle Continues
The case has been remanded to U.S. District Judge Paul Engelmayer in Manhattan for further proceedings. In response to the court’s decision, Coinbase’s chief legal officer highlighted that there is no private liability for the secondary trading of digital assets on exchanges like Coinbase.
Future Legal Proceedings
The customers’ lawyer expressed gratitude for the court’s decision and confirmed plans to pursue the case against Coinbase and its CEO, Brian Armstrong. The legal battle is far from over, with both sides gearing up for a protracted fight in the courtroom.
SEC Lawsuit Continues
Coinbase is also facing a separate lawsuit by the Securities and Exchange Commission, alleging that the exchange facilitated the trading of unregistered securities. The legal challenges are mounting for Coinbase, as regulatory scrutiny intensifies in the cryptocurrency industry.
