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Class-Action Lawsuit Against Coinbase Over Alleged Securities Violations
Six Coinbase customers recently initiated a class-action lawsuit against the prominent crypto exchange, Coinbase Global, as well as its subsidiaries — Coinbase, Inc. and Coinbase Asset Management, LLC. The lawsuit, filed on May 5th, contends that the digital assets available on Coinbase are, in fact, securities. Among the tokens listed are Solana (SOL), Polygon (MATIC), Near Protocol (NEAR), Decentraland (MANA), Algorand (ALGO), Uniswap (UNI), Tezos (XTZ), and Stellar (XLM). The plaintiffs argue that these tokens should be classified as ‘investment contracts,’ therefore subject to state securities laws.
The lawsuit highlights that Coinbase explicitly acknowledges being a “Securities Broker” in its user agreement. Consequently, it is alleged that the defendants consciously and repeatedly breached state securities laws while misleading their users. The legal complaint, filed with the U.S. District Court for the Northern District of California, San Francisco Division, asserts that:
“Its (Coinbase’s) entire business model has been built upon a lie and a dream: the lie is that ‘we do not sell securities,’ and the dream is that, knowing it would eventually be caught in the lie, ‘it is better to ask for forgiveness than permission.’”
The lawsuit was brought forth by plaintiffs Gerardo Aceves, Thomas Fan, Edwin Martinez, Tiffany Smoot, Edouard Cordi, and Brett Maggard from California and Florida. Seeking full recission of their purchase agreements, along with statutory damages under state law and injunctive relief, these individuals are demanding accountability from Coinbase.
Legal Battles and Financial Triumphs
Aside from the recent class-action lawsuit, Coinbase has been embroiled in a separate legal dispute with the U.S. Securities and Exchange Commission (SEC) over alleged securities violations. Despite Coinbase’s assertion that the secondary sale of crypto assets does not constitute securities, the SEC has pressed forward with its claims. Coinbase has lodged an interlocutory appeal subsequent to a judicial decision allowing the SEC lawsuit to proceed.
More recently, a notable advocate for XRP, John Deaton, submitted an amicus brief in support of an interlocutory appeal motion on behalf of 4,701 Coinbase customers. Deaton, who is concurrently engaged in an election campaign against Senator Elizabeth Warren, has entered the legal fray on behalf of aggrieved customers.
On the financial front, Coinbase announced a remarkable surge in its Q1 revenue figures, surpassing initial expectations with a reported revenue of $1.64 billion. The exchange’s transaction revenue nearly tripled to $1.07 billion, with consumer transaction revenue alone climbing to $935 million, representing a twofold increase over the preceding year.
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