coinbase
Judge Refuses To Dismiss Coinbase Class Action Lawsuit, Says Exchange Must Face Complaint in New York: Report
A federal judge is reportedly ruling that top US-based crypto exchange Coinbase must face a class action lawsuit in New York.
According to a new report from Reuters, Paul Engelmayer, a judge for the Southern District of New York, is rejecting Coinbase’s argument that it did not qualify as a “statutory seller” to dismiss a lawsuit that alleges the firm illegally sold securities in the form of digital assets to customers without being registered as a broker-dealer.
Engelmayer says that Coinbase’s claim was invalid because it never passed title to the 79 crypto assets traded by customers, noting that “customers on Coinbase transact solely with Coinbase itself.”
In a statement, Coinbase says,
“Coinbase does not list, offer, or sell securities on its exchange. We look forward to vindicating the remaining claims in the district court.”
Engelmayer further rejected to dismiss claims governed by the laws of California, New Jersey and Florida, noting that the complainants have sufficient grounds to allege that Coinbase was the direct seller of the crypto assets.
In February of 2023, Engelmayer dropped the lawsuit but an appellate court reviewed the case and decided to return some parts of it to the judge.
In June 2023, Coinbase was sued by the U.S. Securities and Exchange Commission (SEC) for allegedly violating securities laws as well as operating as an unlicensed broker-dealer.
However, a year later, Coinbase filed its own lawsuit against the regulatory agency alongside the Federal Deposit Insurance Corporation (FDIC) claiming that they were out to intentionally cripple the digital assets industry.
As stated by Coinbase at the time,
“The SEC has waged a scorched-earth enforcement war on digital-asset firms that, in conjunction with efforts by other financial regulators to de-bank crypto firms, is designed to cripple the digital asset industry.”
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Leverage Shares by Themes has launched a new exchange-traded fund (ETF) tied to the Nasdaq-listed cryptocurrency exchange Coinbase (COIN) stock despite a downturn in the crypto-related shares.
The Leverage Shares 2X Long Coinbase Daily ETF (COIG) is designed to deliver twice the daily return of Coinbase’s stock price, offering traders an amplified exposure to the U.S.’s largest cryptocurrency exchange. The ETF, which carries an expense ratio of 0.75%, is listed on Nasdaq, according to a press release.
The launch comes amid a significant cryptocurrency market downturn that saw bitcoin (BTC) drop by around 19% over the last three months, from over $105,000 to now stand at wrought $84,000. COIN shares saw even worse performance, losing nearly 42% of their value during the same period.
The new ETF allows investors to take advantage of Coinbase’s stock performance volatility without directly holding shares.
These types of single-stock leveraged ETFs, for both longs and shorts sides, are typically used for short-term trading due to the high levels of risks associated with daily compounding. The profits and losses for both types of these are amplified when the prices of the underlying stocks move significantly.
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Coinbase has filed a FOIA request against the US Securities and Exchange Commission (SEC), riding on the highs of the dismissal of its case against the securities regulator. A glance at the document reveals that the US-based crypto exchange is seeking a raft of information on the SEC’s expenditure in its crypto war.
Coinbase Wants Full Disclosure Of SEC Spending In Its Enforcement Actions
US-based crypto exchange Coinbase is seeking information on the SEC’s spending in its war against major entities in the cryptoverse. Coinbase has filed a Freedom of Information Act (FOIA) request against the securities regulator to obtain information on the fiscal handling of its crypto lawsuits.
According to the document, the exchange is seeking information between April 2021 and January 2025 on the Commission’s spending. Coinbase’s request spans the total annual expenditures for digital asset investigations and enforcement actions against the industry.
Coinbase is also seeking information on the number of SEC full-time staff and details of their compensation packages. Furthermore, the FOIA request wants similar information on third-party contractors including their working hours and compensation packages.
Of particular concern is the Crypto Assets and Cyber Unit with Coinbase’s filing requesting the annual budget of the unit and compensation of its staff. Several cases initiated by the unit have been dismissed with the latest being Kraken’s case dismissal with prejudice.
“The previous SEC spent four years attacking a lawful industry, and American taxpayers were left holding the bill,” said Coinbase in a statement. “How much did you end up paying? We intend to find out.”
Several High-Level Crypto Lawsuits Will Drive The Bill Up
Following the filing of the FOIA request, the cryptoverse scans the horizon for the release of figures by the SEC. The SEC has nine possible defenses in the form of exceptions to the FOIA like internal personnel rules among others.
The release of the figures could run into millions of dollars, accentuated by a streak of high-profile crypto lawsuits. During the period under review, the SEC dragged Coinbase, Ripple Labs, Gemini, and Binance to court over alleged breaches of capital market rules.
The SEC case dismissal against Coinbase has triggered a wave of similar actions for affected entities. The dismissals are in sharp contrast to the heightened enforcement actions by the Gary Gensler-led agency.
SEC Commissioner Hester Pierce has criticized regulation by enforcement previously deployed by the SEC while hailing its new forward-thinking approach.
Aliyu Pokima
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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Altcoins
Brian Armstrong Calls Memecoins ‘Canary in the Coal Mine,’ Predicts Tokenization of Identity, Songs, Votes and More
Coinbase CEO Brian Armstrong says that memecoins are the canary in the coal mine, foreshadowing a broader trend of the tokenization of culture.
In a new interview with CNBC, Armstrong says he expects memecoins to eventually lead to the tokenization of identities, votes and art.
“Memecoins in the broadest sense, I think we should find a way for artists to get paid. Anyone should be able to put artwork and get paid for it. I do think memecoins are a canary in the coal mine, that more and more of the world is going to get tokenized and put on-chain.
Every asset class, every vote, every identity, every song, every Instagram post, whatever – in the future I think more and more of these things are going to tokenized. Now, we also need to make sure people are following the law and not doing pump-and-dump schemes or insider trading, and there probably has been a little bit of that in the memecoin space which is not helping anybody.
In every crypto cycle, there seems to be people who rush in and they forget these lessons of the past, but insider trading should obviously be prosecuted and people should avoid doing that unless they want to go to prison.”
However, Armstrong admits that recent controversies surrounding memecoins – including Argentinian President Javier Milei’s LIBRA promotion – haven’t been a great look for the industry. But, he says that there is still a positive underlying path forward for digital assets.
“I do think we’re in the early stages of this industry so it’s the Wild West a little bit with memecoins right now. There’s good that comes with that which is a lot of innovation is happening.
There’s some bad happening as well from what I understand, it sounds like President Milei accidentally shared that information without actually understanding exactly what he was sharing if you believe his comments.
My hope is that this gets cleaned up and people continue to think long-term about how are we going to create real value for the billions of people in the world who need an updated financial system.”
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