Coinbase Faces Lawsuit for Alleged Deception in Selling Unregistered Securities

Cryptocurrency exchange Coinbase and its CEO, Brian Armstrong, are facing a new lawsuit from a group of plaintiffs from California and Florida who claim they were deceived into buying unregistered securities.

This is not the first legal hurdle Coinbase faces following a lawsuit filed by the US Securities and Exchange Commission (SEC) from mid-2023.

A lawsuit alleges that Coinbase sold unregistered securities

It was the new class action lawsuit foot In the United States District Court for the Northern District of California, San Francisco Division. The plaintiffs include Gerardo Aceves, Thomas Vann, Edwin Martinez, Tiffany Smoot, Edward Cordy, and Brett Maggard.

The lawsuit alleges that the Coinbase exchange admitted in its user agreement that it was acting as a broker for securities assets. Additionally, the plaintiffs alleged that Coinbase Prime Brokerage was highlighted as a securities broker.

However, despite this recognition, it continued to provide access to assets such as Solana (SOL), Polygon (MATIC), Near Protocol (NEAR), Decentraland (MANA), Algorand (ALGO), Uniswap (UNI), and Tezos (XTZ). . and Stellar Lumen (XLM), which the suit claims are unregistered securities.

Plaintiffs seek full reversal, statutory damages under state law, and injunctive relief through a jury trial.

Coinbase is facing legal battles on multiple fronts

This latest lawsuit differs from the widely discussed legal dispute between Coinbase and the SEC, which also raises questions about whether tokens offered on the exchange should be classified as securities. Notably, the company recently filed an interlocutory appeal in response to the judge's ruling that allowed the case to proceed.

John Deaton, a cryptocurrency lawyer who campaigned to challenge Senator Elizabeth Warren at this time, recently stepped in to support Coinbase.

In an April 26 filing to the U.S. District Court for the Southern District of New York, Deaton filed an amicus brief supporting an interlocutory appeal motion on behalf of 4,701 Coinbase customers.

In a separate matter, several Coinbase customers have initiated legal action against the company regarding its management of the GYEN stablecoin, which they assert is not stable at all. According to this lawsuit, Coinbase actively promoted and traded the GYEN token despite knowing of its high volatility, resulting in significant losses for investors.

Furthermore, Coinbase's cryptocurrency stake has raised regulatory concerns. The SEC claims it is an unregistered investment contract and security. Several states within the United States have joined the SEC's lawsuit, alleging that Coinbase violated securities laws in connection with its staking rewards program.