Rosen Law Firm Files Class Action Against Coinbase Over ‘Unregistered’ Crypto Trading

News | June 17, 2024 By:

On Tuesday, June 4, 2024, the Rosen Law Firm, on behalf of the plaintiffs, filed a nationwide class action lawsuit against leading cryptocurrency exchange Coinbase in the Northern District of California. The complaint accuses Coinbase of violating securities laws in California and Florida by allowing users to trade digital asset securities on its platform without proper registration.

The proposed class action alleges that since 2017, Coinbase marketed and sold crypto tokens that qualify as securities under law but failed to register as a broker-dealer with the U.S. Securities and Exchange Commission (SEC) or state authorities. Named as defendants are Coinbase and its CEO and co-founder Brian Armstrong.

The plaintiffs, representing users who purchased certain cryptocurrencies through Coinbase Earn and traded other tokens like Algorand, Decentraland, Polygon, and Stellar Lumens, argue that Coinbase misled investors by suggesting digital assets listed on its exchange were not securities. They claim Coinbase operated unlicensed exchanges and broke broker-dealer laws.

Coinbase, which went public on the Nasdaq in 2021, is not registered as a broker, dealer, bank, or other regulated financial institution. It runs popular trading platforms Coinbase and Coinbase Pro.

However, in 2023 the SEC filed a lawsuit against Coinbase accusing it of running an unregistered stock exchange and clearing agency. While the company denied wrongdoing, a New York judge allowed the case to move forward in March 2024.

Additionally, Coinbase faces another proposed class action filed in 2021 regarding similar securities law violations. An appeals court revived that case in April after initial dismissal.