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A New York law firm, Bragar Eagle & Squire, has filed a court case against Coinbase for knowingly offering illegal securities to customers. The accusation involves anyone who purchased the alleged securities within the past one and a half years.
Coinbase Faces Class Action Case For Selling Securities
On Thursday, another court case hit the US-based crypto exchange, Coinbase, at a district court in the US. The suit alleged that Coinbase has not been transparent with its business operation’s legality for a year.
The multiple-faceted case accused the crypto firm of keeping the client’s virtual assets despite being aware of the legal consequences. It claimed Coinbase knew those assets could be seized by a bankruptcy estate turning users into vulnerable creditors.
It also accused the exchange of allowing clients to trade securities which were not authorized by the Securities and Exchange Commission (SEC). According to reports, the NY law firm represents every entity that purchased the securities in question from Coinbase from 14th April last year till 26th July 2022.
A law firm spokesperson commented that the ongoing lawsuit had exposed Coinbase to critical government scrutiny and correction. Meanwhile, the case is still in the early stages, and the central accusation is making headlines in the SEC. The SEC said Coinbase sells illegal securities disguised as digital assets to customers.
Coinbase Faces Lawsuit Over Failure To List Terra Classic
In July 2022, SEC filed a lawsuit against Ishan Wahi, the ex-product manager at Coinbase. He allegedly sold 25 digital assets, of which the SEC marked nine as unregistered investment contracts.
According to reports, the SEC had already started probing Coinbase before the announcement of Wahi’s case. Securities are investment contracts that financial firms sell and buy for profits.
Different regions have different decimations and descriptions for securities. United States regulators see security according to the principles from Howey Test. One of the NY law firm attorneys revealed that there is a strong perception that the majority of Coinbase’s assets are probably unregistered securities in disguise.
According to statistics, the shares of Coinbase’s shares significantly dropped when the lawsuit news hit the public. However, the share price surprisingly skyrocketed to %60 regardless of the ongoing court case.
Analysts suggested that the sudden pump was due to the announcement of Coinbase and BlackRock’s collaboration shortly after the lawsuit. Another class action case against Coinbase in June accused the crypto firm of failing to list Terra Classic tokens on its exchange.
Furthermore, in the same month, some customers filed another case against the crypto firm in a federal court. They accused Coinbase of listing an unstable coin, GYEN, as a stablecoin which they claimed made them lose their funds.
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