Coinbase Hit With Lawsuit Over Alleged Securities Violations

Coinbase Global, along with its CEO Brian Armstrong and two subsidiaries, is facing a class-action lawsuit filed by six of its users. The lawsuit, registered on May 5th in the Northern District of California, accuses Coinbase of falsely listing digital assets which are, according to the plaintiffs, actual securities. The cryptocurrencies in question include Solana (SOL), Polygon (MATIC), and others, which the plaintiffs believe should be regulated as ‘investment contracts’ under state securities laws.

The complaint points out that Coinbase’s user agreement identifies it as a “Securities Broker,” contradicting its public stance that it does not deal in securities. The plaintiffs argue that Coinbase has “knowingly and intentionally” violated securities laws, building its business model on misleading claims. They are seeking a complete reversal of their transactions and statutory damages.

This legal trouble compounds an existing lawsuit from the SEC, which charges that Coinbase illegally sold crypto assets. Despite this, Coinbase has contested these claims and is appealing a court decision that allowed the SEC’s case to proceed. In another development, lawyer John Deaton, actively campaigning against Senator Elizabeth Warren, has filed a brief supporting Coinbase’s appeal for 4,701 customers.

Despite these challenges, Coinbase reported a significant increase in revenue in the first quarter, with figures reaching $1.64 billion and transaction revenue almost tripling to $1.07 billion. This financial success underscores Coinbase’s robust market presence amid ongoing legal issues.