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Coinbase Unauthorized Securities Exchange Class Action Lawsuit Overview:
- Who: Christopher Underwood, Louis Oberlander and Henry Rodriguez filed a class action lawsuit against Coinbase Global, Inc. and its CEO Brian Armstrong.
- Why: Underwood, Oberlander and Rodriguez claim Coinbase is operating as an unauthorized securities exchange.
- Where: The class action lawsuit was filed in New York federal court.
The popular cryptocurrency trading platform Coinbase is operating as an unauthorized securities exchange, a new class action lawsuit alleges.
Plaintiffs Christopher Underwood, Louis Oberlander and Henry Rodriguez claim in an amended complaint that Coinbase has 79 digital assets available for trading on the platform that should be classified as securities.
The plaintiffs, who also named Coinbase CEO Brian Armstrong as a defendant, claim crypto tokens available for trade on Coinbase are, in reality, securities that the company is not authorized to sell.
Further, the cryptocurrency buyers argue Coinbase is in violation of state and federal securities laws by doing so.
“Coinbase is selling these securities despite the fact that there is no registration statement in effect for these securities and despite the fact that Coinbase has refused to register either as a securities exchange or as a broker-dealer,” the class action lawsuit states.
Coinbase Crypto Tokens Qualify As ‘Investment Contracts,’ Plaintiffs Say
Underwood, Oberlander and Rodriguez argue the 79 crypto tokens in the class action lawsuit meet the legal criteria to be considered securities and qualify as “investment contracts” since the token holders only “hope to profit from the managerial efforts of those running the issuer.”
“The tokens issued in these (initial coin offerings) are therefore investment contracts and securities because they represent the investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others,” the class action lawsuit states.
The cryptocurrency buyers claim new crypto tokens are generally revealed with an initial coin offering that, at most, provides documentation about what the assets are. However, the buyers say these documents “do not satisfy the requirements for a prospectus under federal and state securities laws.”
Underwood, Oberlander and Rodriguez claim Coinbase is in violation of the Securities Exchange Act of 1934 and individual state acts from California, New Jersey and Florida, including the California Securities Act. They want to represent a nationwide class and California, Florida and New Jersey subclass of Coinbase users who have traded tokens on the platform since Oct. 8, 2019.
Plaintiffs are demanding a jury trial and requesting declaratory and injunctive relief and appropriate damages to themselves and all class members.
Last month, former US olympian Apolo Ono was able to get out of a class action lawsuit alleging the retired speed skater founded a cryptocurrency company that sold fraudulent tokens.
Have you used Coinbase to trade cryptocurrency tokens? Let us know in the comments!
The plaintiffs are represented by Jordan A. Goldstein and Mitchell Nobel of Selendy Gay Elsberg PLLC and Steven L. Bloch and Ian W. Sloss of Silver Golub & Teitell LLP.
The Coinbase Unauthorized Securities Exchange Class Action Lawsuit is Underwood, et al. v. Coinbase Global, Inc., et al., Case No. 1:21-cv-08353, in the U.S. District Court for the Southern District of New York.
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59 thoughts onCoinbase Class Action Claims Crypto Platform Operates As Unauthorized Securities Exchange
Add me
Yes please send me info
been on coinbase since 2017. add me
add me
Please add me
I have recently got into Coinbase. Am I part of this?
I have been signed on to Coinbase since 2017. Buying primarily. Please advise more
Thank you
Sondra
Add me. Venmo is also selling crypto.
I’ve been trading with coinbase since 2019
Add me please
I have been trading crypto on coinbase for about a 1 1/2 yrs now.i really don’t understand this lawsuit
I do have cryptos with Coinbase. I’ve had them for about 3 maybe 4 years with them. I really don’t understand this lawsuit. I’ll have to read more.