Coinbase, the crypto trading platform, has found itself at the center of a class action lawsuit brought forth by its users alleging unregistered securities sales activity. Coinbase is currently involved in an appeal process before the United States Securities and Exchange Commission (SEC).
Judge Denies Coinbase’s Attempt to Dismiss Case
Coinbase must stand trial on February 7 for allegations that it operated as an unregistered broker, specifically regarding its sale of 79 tokens considered securities by plaintiff group. U.S. District Judge Paul Engelmayer in Manhattan dismissed Coinbase’s argument that titles to tokens never directly transferred from them to purchasers, instead classifying Coinbase as a direct seller due to transactions occurring solely through its platform.
Coinbase and its users have been engaged in an intense legal battle. A previous dismissal by the 2nd US Circuit Court of Appeals in Manhattan was overturned due to issues regarding user agreements from December 2021, as the case advances and Coinbase remains firm on their stance that their platform does not list, offer, or sell securities; hence preparing themselves for an aggressive defense before court.
Coinbase currently faces another lawsuit from the Securities and Exchange Commission alleging its unregistered broker-dealer operations and the unlawful sale of securities through its staking program are unlawful, however they have managed to temporarily delay this case via an interlocutory appeal which challenges how digital assets are classified under US securities law.
Could Coinbase Become a Financial Giant?
Bitwise Chief Investment Officer Matt Hougan recently expressed an upbeat opinion of Coinbase, suggesting it may reach a market valuation of $1 trillion in the near future. Hougan credits Coinbase’s resilience and high margins during an adverse regulatory period under former U.S. administration for setting it up as potential leader under more favorable regulation policies.
Hougan’s optimism is underscored by the current growth and potential of the cryptocurrency market, indicating promising prospects for Coinbase should it pursue its current course amid changing market conditions.
