Coinbase, which is listed on Nasdaq, was sued for allowing customers to trade 79 cryptocurrencies, some of them unregistered securities.
Coinbase Sells 79 Unregistered Crypto Securities To Customers in Lawsuit
Last week, a class-action lawsuit against Coinbase Global Inc. and Coinbase Inc. was filed.
Christopher Underwood, Louis Oberlander and Henry Rodriguez, the Coinbase customers and lead plaintiffs, claim that Coinbase enabled users to purchase and sell 79 different cryptocurrency without them knowing they were securities. They also stated that the crypto securities were not registered by the U.S. Securities and Exchange Commission, or any other state regulators. Coinbase is not licensed as either a securities exchange nor broker-dealer.
The plaintiffs claim that “Coinbase’s sale of these tokens violates both federal and state law.” The class covers all persons or entities who transacted any of the 79 crypto tokens on Coinbase or the Coinbase Pro platform during the class period.
Plaintiffs claimed they could not have these assets registered with the SEC or state regulators.
Investors don’t have the right to see the disclosures associated with traditional securities. Rather, investors receive — at most — only the so-called whitepapers, which describe the token, but do not satisfy the requirements for a prospectus under federal and state securities laws.
AAVE, ACH., ADA., AMP. ANKR. AUCTION. AXS. BAL, BAND. BAT. BNT. BOND. BTRST. CGLD. CRO. CTSI. CVC. DNT. DOGE. DOT. ENJ. EOS. FARM. FET. FIL. FORTH. GNT. GRT. GTC. ICP. IOTX. KN. OGN. OMG. ORN.
Gary Gensler, the Chairman of SEC, is named in several instances. Multiple times, Gensler stated that the SEC does not provide enough protection for investors in crypto. He stressed the fact that platforms can list between 50 and 100 tokens. Some of these tokens could be securities.
The SEC is not actively clarifying what cryptocurrencies are securities. Ripple Labs was sued by the Commission in December 2000. The Commission also sued two of its executives for selling XRP, which it claimed were unregistered securities. Ripple claims that XRP doesn’t constitute a security. This lawsuit is ongoing.
According to Coinbase’s class-action lawsuit document:
It is a case of a collective action, in which all claims by the proposed classes exceed $5,000,000. This includes interest and cost.
The plaintiffs seek to “recover damages, consideration paid for tokens, and trading fees, together with interest thereon, as well as attorneys’ fees and costs, to the fullest extent permitted by law.”
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