It alleges that customers can trade 79 unregistered securities such as XRP and dogecoins (DOGE) and shiba Inu (SHIB).
Coinbase Sold 79 Unregistered Crypto Securities To Customers in Lawsuit Claims
Last week, a class-action lawsuit against Coinbase Global Inc. and Coinbase Inc. was filed.
Christopher Underwood, Louis Oberlander and Henry Rodriguez , lead plaintiffs, allege that Coinbase allowed customers to buy and sell 79 cryptocurrencies from October 8, 2019 to the present without disclosing they were securities. These crypto securities were not registered with the U.S. Securities and Exchange Commission, or any state regulators. Coinbase is also not registered as a securities trading platform or broker-dealer.
Plaintiffs claim that Coinbase’s sale these tokens is in violation of both federal and state laws. The class includes all individuals or entities that transacted any of the 79 cryptocurrency tokens on Coinbase, or the Coinbase Pro platform, during the class period.
The plaintiffs claimed that they did not register these crypto assets with the SEC or state regulators.
The disclosures accompanying traditional securities issuances are not available to purchasers. Investors receive the “whitepapers”, which are brief descriptions of the token but don’t satisfy the prospectus requirements under state and federal securities laws.
AAVE, ACH and AMP are the 79 cryptocurrencies that were named in the lawsuit.
In the lawsuit, Gary Gensler, SEC Chairman, is cited several times. On several occasions, the SEC chief stated that there isn’t enough investor protection within the crypto sector. He stressed that some platforms may list between 50 and 100 tokens, with some likely being securities.
The SEC has not clarified which cryptocurrencies it considers securities. The Commission sued Ripple labs and two executives in December 2000 over the sale XRP, which it claimed was unregistered securities. Ripple insists that XRP does not constitute a security. The lawsuit is still active.
According to Coinbase’s lawsuit document for class action:
This is a case of a class action in which the combined claims of all members of the proposed classes exceeds $5,000,000, excluding interest and costs.
Plaintiffs are seeking to “recover damages and consideration paid for tokens and trading fees, along with interest thereon, and attorneys’ fees and cost, to the maximum extent allowed by law.”
