A New Jersey judge accepted a case against Coinbase for depicting a potential regulatory takedown.
U.S. District Judge Brian Martinotti decided late on September 5, ruling that Coinbase stockholders could file a lawsuit against the cryptocurrency exchange for misrepresenting its position about the Securities and Exchange Commission’s filing of a civil complaint.
The class action lawsuit claimed that Coinbase, its CEO Brian Armstrong, and other company executives had misrepresented the possibility of an SEC enforcement action.
It was led by the Swedish pension fund Sjunde AP-Fonden. In addition, Judge Martinotti decided that in the case of a bankruptcy filing, shareholders had a right to review the firm’s risk disclosures carefully.
The decision was made just before Coinbase’s shares began an eight-day losing run. In the midst of poor cryptocurrency price performance, COIN shares established a “risky pattern,” according to a market expert.
Coinbase Juggles Legal Conundrums
Another partial setback in Coinbase’s ongoing battle with the SEC was signaled by Martinotti’s rejection of the company’s move to dismiss.
The firm’s attempt to have an SEC civil complaint dismissed in June 2023 was denied by a federal judge in New York in March.
But the company has also advanced in court. Judge Katherine Polk Failla ordered the SEC to release information necessary for the exchange’s defense, according to Coinbase CLO Paul Grewal.
A judge likewise dismissed the SEC’s argument that Coinbase Wallet was an unlicensed broker-dealer.
Throughout the U.S. election, the corporation has been actively lobbying, whether by hosting cryptocurrency fundraisers for politicians or by making direct donations to super PACs like Fairshake.
Grewal further stated to Bloomberg that a pro-crypto Congress was virtually guaranteed during November’s presidential elections.
