Federal Judge Forces Coinbase to Confront Broker-Dealer Allegations

Coinbase (NASDAQ: COIN) is facing mounting legal pressure over allegations that it illegally offered and sold digital tokens that qualify as securities. A federal judge in Manhattan recently ruled that Coinbase must answer claims from customers who say the company failed to register as a broker-dealer.

District Judge Paul Engelmayer determined that Coinbase could not escape liability by arguing it did not qualify as a “statutory seller” under federal securities laws. According to the judge’s findings, because customers transact directly with Coinbase, the company is effectively acting as the seller of these tokens.

Although parts of the initial lawsuit were dismissed in early 2023, the 2nd US Circuit Court of Appeals revived certain critical claims in April of that year.

In a statement, Coinbase reiterated that it “does not list, offer, or sell securities on its exchange” and that it anticipates defending its position in the district court. While the lawsuit has the potential to impose penalties if Coinbase is found in violation of securities laws, the company asserts that the tokens traded on its platform do not meet the legal definition of securities under long-standing precedent.

Simultaneously, the SEC has launched its own legal action against Coinbase, alleging the platform permitted trading in digital tokens that should have been registered as securities. In a separate proceeding, another federal judge in Manhattan granted Coinbase the right to swiftly appeal whether the Howey test should govern digital tokens.

Coinbase contends this appeal could offer critical clarity for the entire cryptocurrency industry, which faces ongoing uncertainty over how digital assets are regulated.


Information for this story was found via Reuters and the sources and the companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

2026 Could Be Gold’s Biggest Year Yet!? | Ryan King – Equinox Gold

Gold Is Screaming Higher While Currencies Burn | Simon Ridgway – Rackla Metals

We Have the Highest-Grade Antimony Deposit in North America!? | Jim Atkinson -Antimony Resources

Recommended

Canadian Copper Secures $8 Million Lead Order From Ocean Partners As Part Of Larger Funding Round

Northern Superior Expands Philibert With 350 Metre Step Out Testing 1.10 g/t Gold Over 25.5 Metres

Related News

Coinbase Reports Disappointing 3Q 2021 Earnings; Stock’s Valuation Seems Extended

On November 9, after the regular stock market close, Coinbase Global, Inc. (NASDAQ: COIN), the...

Thursday, November 11, 2021, 03:36:00 PM

Bitcoin Soars To New Record Ahead of Coinbase Public Debut

The world’s largest cryptocurrency, bitcoin, jumped to yet another all-time high, as the market for...

Tuesday, April 13, 2021, 02:40:00 PM

Growth Names Continue To Steal Value From Investors Via Excessive Stock Compensation

Stock-based compensation paid to employees by selected growth companies that this column follows closely was...

Wednesday, April 26, 2023, 07:28:00 AM

Class Action Lawsuit Filed Against Coinbase Alleges Sale of Unregistered Securities

A significant class action lawsuit has been filed against Coinbase (NASDAQ: COIN), one of the...

Monday, May 6, 2024, 11:14:47 AM

Coinbase Partners With BlackRock, World’s Largest Asset Manager, In A Bid To Court Institutional Investors

The world’s largest asset manager meets the world’s largest cryptocurrency exchange platform as BlackRock (NYSE:...

Friday, August 5, 2022, 03:49:00 PM