- A new class action lawsuit targets Coinbase, accusing the cryptocurrency exchange of selling unregistered securities and operating as an unregistered broker.
- Plaintiffs claim financial losses from investments in various crypto assets sold by Coinbase, alleging that they were marketed as investments.
- The lawsuit asserts that Coinbase failed to register its personnel as associated persons of a broker-dealer and neglected to register as a broker-dealer with regulatory authorities.
- Plaintiffs’ attorneys utilized the Howey Test to analyze digital assets such as ALGO, MANA, MATIC, NEAR, UNI, and SOL, alleging investors expected profits from token appreciation.
- The lawsuit seeks to nullify purchase or sale contracts with Coinbase and recover losses incurred, including associated fees.
A recent class action lawsuit filed against Coinbase, the prominent San Francisco-based cryptocurrency exchange, alleges the platform engaged in the sale of unregistered securities and operated as an unregistered broker. Initiated on May 3, the legal action claims that Coinbase’s actions led to financial losses for investors who purchased various crypto assets through the platform. These assets were purportedly marketed as investment opportunities.
Legal documents submitted in California by a group of crypto investors outline the allegations against Coinbase. The plaintiffs maintain that the losses they suffered are a direct consequence of Coinbase’s conduct, accusing the exchange of marketing and selling digital asset securities to investors without proper registration. According to the lawsuit, Coinbase failed to register its personnel involved in the sale of these securities as associated persons of a broker-dealer and neglected to register itself as a broker-dealer with regulatory bodies such as the Securities and Exchange Commission (SEC) and state authorities.
The lawsuit employs the Howey Test, a standard used to determine whether certain transactions qualify as investment contracts, to assess various digital assets offered by Coinbase, including ALGO, MANA, MATIC, NEAR, UNI, and SOL. Allegations suggest that investors in these assets expected to profit from their appreciation in value. Notably, the lawsuit does not address UNI’s role as a governance token, focusing solely on its potential for profit.
Seeking legal recourse, the plaintiffs aim to invalidate their purchase or sale contracts with Coinbase and recover incurred losses, including associated fees. This class action comes at a time when Coinbase is already embroiled in legal disputes with regulatory authorities, including an ongoing battle with the SEC.