Jonathan Stempel
New York (Reuters) – Coinbase has to face the lawsuit of customers who have accused the largest American exchange of cryptocurrencies of illegal sales of securities without registration as brokerage sellers, a federal judge who judged Friday.
US District Judge Paul Engelmayer on Manhattan rejected Coinbase’s argument that he did not qualify as a “legal seller” under the Federal Securities Law, because he never transferred the title to the 79 tokens traded.
The judge cited “Coinbase Transact buyers exclusively with Coinbase itself,” which requires the conclusion that Coinbase was a seller.
Engelmayer also refused to reject the requirements of California, Florida and New Jersey, saying that customers adequately claimed that Coinbase was a direct token seller.
“Coinbase does not state, does not offer or sell securities on his exchange,” Coinbase said in a statement. “We look forward to revenge on the remaining requests in the District Court.”
Customer lawyers did not immediately respond to the comment requests.
Engelmayer dismissed the lawsuit in February 2023, but the 2nd Appellate Court in Manhattan, April 2. The decision on Friday allows these parts of teaching. Customers sought indefinite damage.
The US Securities and Exchange Commission also sues Coinbase, claiming that the exchange illegally allowed the trafficking of the tokens that were to be registered as value papers.
Last month, the second federal judge at Manhattan put the case that Coinbase could immediately ask for the 2nd Circle if, according to the precedent of the Supreme Court of 1946, the digital token trade were the investment contracts that needed to be regulated as securities.
In the submission of the court of January 17, Coinbase told the appellanting court that his decision could “clean the cloud that is currently hanging over the cryptocurrency market”.
The case is Underwood and Sur against Coinbase Global Inc, etc., US District Court, Southern New York district, no. 21-08353.
(Reporting Jonathan Stempel in New York, Mounting Louise Heaven)
