A federal judge has decided that Coinbase, a major US crypto exchange, must respond to a class action case in New York. The lawsuit claims that Coinbase sold unregistered securities.
Reuters reports that Judge Paul Engelmayer from New York’s Southern District dismissed Coinbase’s claim that it is not a “statutory seller” as defined by the law.
The case says the company sold digital assets without following the rules to register as a broker-dealer. Engelmayer said that Coinbase’s claim was not true because the crypto exchange dealt directly with customers instead of just helping them make trades.
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.”
The judge decided not to dismiss claims related to the laws of California, New Jersey, and Florida. He said the plaintiffs have enough reasons to claim that Coinbase sold crypto assets directly.
In February 2023, Engelmayer dropped the case, but a higher court later brought back some parts of it for further review.
Coinbase has been facing more attention from regulators. In June 2023, the U.S. Securities and Exchange Commission (SEC) sued them for supposedly breaking securities laws and working as an unregistered broker-dealer.
A year later, Coinbase sued the SEC and the FDIC, saying that the regulators were trying to hurt the digital assets business on purpose.
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.”
