Coinbase Hit By Lawsuit Over Unregistered Securities Sales

Coinbase will face a lawsuit brought by its customers. The lawsuit alleges that the company violated securities laws by illegally selling securities without being registered as a broker-dealer.

The ruling was made by US District Judge Paul Engelmayer in Manhattan on Friday. Coinbase had argued that it did not qualify as a “statutory seller” under federal securities law, as it did not transfer ownership of the 79 tokens traded by customers.

However, Judge Engelmayer rejected this argument, citing the claim that “customers on Coinbase transact solely with Coinbase itself,” leading him to conclude that Coinbase did act as a seller.

The judge also denied requests to dismiss claims made under the laws of California, Florida, and New Jersey. He determined that the customers had adequately presented evidence that Coinbase was a direct seller of the tokens.