Following the dismissal of the class action lawsuit brought against the company, the shares of global cryptocurrency exchange Coinbase experienced a spike of more than 20%.
Judge Paul Engelmayer of the United States District Court rejected users’ allegations that Coinbase had sold them unregistered securities and had failed to register as a broker-dealer. The customers’ claims alleged that Coinbase had offered them unregistered securities.
The legal action was taken on behalf of customers who wanted reimbursements for token purchases, trading fees, and probable losses incurred while using the platform. The plaintiffs claimed that Coinbase possessed the crypto assets that it subsequently directly sold to end customers.
The lawsuit was thrown out by Judge Engelmayer because the plaintiffs were unable to demonstrate that Coinbase was the “immediate seller” of those tokens or that it “held the title” to them.
Because the court dismissed the plaintiffs’ federal claims with prejudice, they are not permitted to refile the identical claim in a subsequent proceeding. The accusations that were made in the complaint were “flatly contradicted” by the rules of the user agreement that Coinbase has, according to Judge Engelmayer.
When consumers use Coinbase for trading, the user agreement specifies that they are not engaging directly with the exchange and that Coinbase acts as a “agent” to arrange transactions between buyers and sellers.
According to the petition, customers are advised that they will always maintain custody of their digital assets and that Coinbase will never receive these assets in the user agreement that Coinbase requires them to sign.
Despite the fact that this class action case was thrown out of court, Coinbase is now engaged in a legal struggle with other class action lawsuits in several other jurisdictions, including Georgia and New Jersey.
Compiled by Coinbold
