A new class-action lawsuit targets Coinbase and its CEO, Brian Armstrong, for allegedly misleading investors into purchasing securities and that the company’s operational framework is “unlawful.”
The lawsuit, filed in the United States District Court for the Northern District of California San Francisco Division, is for plaintiffs Gerardo Aceves, Thomas Fan, Edwin Martinez, Tiffany Smoot, Edouard Cordi, and Brett Maggard from California and Florida.
Coinbase As a ‘Securities Broker’
The document highlights that the crypto assets sold by Coinbase meet the criteria for securities under state laws. Some of them are Solana (SOL), Polygon (MATIC), Decentraland (MANA), Near Protocol (NEAR), Algorand (ALGO), Tezos (XTZ), Uniswap (UNI), and Stellar Lumens (XLM).
The plaintiffs also claim that Coinbase’s user agreement designates the platform as a “Securities Broker,” implying that trading these digital assets breaches state securities regulations.
“Coinbase has never registered itself, its people, or the crypto securities it sells. As a consequence, Plaintiffs seek their full recission, statutory damages under state law, and, in addition, injunctive relief,” reads the lawsuit.
The lawsuit could add another front to Coinbase’s ongoing legal battles, which include a lawsuit from the U.S. Securities and Exchange Commission (SEC) alleging violations of securities laws and accusing the exchange of operating as an unregistered broker for its crypto trading platforms —Coinbase Prime and Coinbase Wallet.
As NewsDug reported, Coinbase beat analysts with robust first-quarter revenue, reporting $1.64 billion compared to the expected $1.34 billion, marking a 72% increase. The company, a key player in the U.S. crypto exchange scene, continues to thrive, with its shares up around 30% this year, buoyed by Bitcoin’s soaring value.