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October 11, 2021 at 01:09 PM
What You Need to Know
- Coinbase operates two digital asset trading platforms.
- Plaintiffs are suing Coinbase for not registering its platforms as national securities exchanges.
- Coinbase has denied that the digital assets it lists on the Coinbase Digital Asset Platforms are securities, the suit states.
Coinbase was hit with a class-action lawsuit Friday for not registering its platforms as national securities exchanges or as broker-dealers with the Securities and Exchange Commission.
The plaintiffs seek to recover payment for digital asset securities and related transaction fees, in excess of $5 million. The suit was filed in U.S. District Court for the Southern District of New York.
Coinbase, the U.S.’s biggest cryptocurrency exchange, operates two digital asset trading platforms: Coinbase and Coinbase Pro that each and together meet the definition of an “exchange” under federal securities laws, the suit states.
“Despite the fact that the Coinbase Digital Asset Platforms, as operated by Defendant Coinbase, meet the definition of an ‘exchange’ under federal securities laws, Coinbase has not registered the Coinbase Digital Asset Platforms as national securities exchanges, nor does Coinbase operate the Coinbase Digital Asset Platforms pursuant to an exemption from registration,” the suit states.
Coinbase’s failure to register is therefore a violation of Section 5 of the Exchange Act.
At all relevant times, the suit maintains, “Coinbase claimed to analyze whether a particular digital asset was a security in determining whether to list that digital asset for trading on the Coinbase Platforms. Coinbase has denied that the digital assets it lists on the Coinbase Digital Asset Platforms are securities and has denied that the Coinbase Digital Asset Platforms provide securities services to users of the Coinbase Digital Asset Platforms.”
Coinbase has to date refused to register the Coinbase Digital Asset Platforms as national securities exchanges or as broker-dealers with the SEC, the suit states.
