Coinbase, a key cryptocurrency exchange, is mired in a multi-front legal battle. From angry investors to the SEC’s watchful eye, the company faces obstacles that jeopardize its operations and raise doubt about the future of cryptocurrency regulation.
Coinbase is accused of selling unregistered securities
A new class-action complaint filed in California claims that Coinbase deliberately violated state securities laws by offering unregistered securities. The plaintiffs, a collection of investors, are targeting specific tokens such as Solana and Uniswap, claiming they should be categorized as investments rather than simple digital assets.
They bring out a potential conflict in the exchange’s user agreement, which may identify the organization as a “Securities Broker.” This lawsuit follows a similar one that is already underway, indicating a rising trend of investor dissatisfaction with Coinbase’s cryptocurrency offers.
A screenshot of the class action lawsuit filed against Coinbase. Source: US District Court Northern District of California.
Coinbase Vs. SEC
The US Securities and Exchange Commission (SEC) is at the centre of the most significant legal battle. The SEC accuses Coinbase of operating as an unregistered securities exchange and broker by providing unregistered tokens. The corporation vehemently denies these allegations and has filed an appeal against the initial decision.
This conflict illustrates the fundamental issue: a lack of clear legislation governing bitcoin. Coinbase, like many others in the industry, sees this case as an overreach by the SEC, and advocates for a more defined regulatory framework that supports innovation without strangling growth.
Bitcoin is now trading at $64.493. Chart: TradingView
John Deaton has joined to help
The involvement of John Deaton, a notable crypto lawyer recognized for his advocacy against governmental overreach, adds to the interest. Deaton has filed an amicus brief in support of Coinbase in the SEC case.
This effort represents the industry’s united front against what it sees as burdensome rules. Deaton’s pro bono labour demonstrates the enormous stakes involved, not only for the cryptocurrency exchange but for the entire crypto ecosystem.
GYEN and staking programs are under scrutiny.
Coinbase’s legal difficulties go beyond the SEC action. A separate action accuses the exchange of mishandling the GYEN stablecoin, a cryptocurrency tied to the Japanese yen. Plaintiffs claim that the firm promoted and traded GYEN despite knowing about its volatility, resulting in substantial investor losses.
Regulators have also expressed interest in the company’s staking scheme, which allows users to receive rewards for holding cryptocurrency. Staking is considered an unregistered security by the SEC, and numerous US states have joined the case, complicating Coinbase’s legal environment even further.
Featured image from Salt&Light, chart from TradingView
Disclaimer: Information found on Cryptonewsmart is those of the writers quoted. It does not represent the opinions of Cryptonewsmart on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use the provided information at your own risk. See Disclaimer for more information.
Sign up now to receive our weekly Free newsletter and stay informed about cryptocurrency.
If you have any questions, feel free to reach out to us on our social media platforms. We will do our best to respond promptly after you follow us.
Instagram | Twitter | Facebook | YouTube
