By failing to complete the necessary registration as a securities exchange, user accuses Coinbase of flouting federal and state regulations.
On behalf of account and wallet users “who have had their accounts compromised and experienced damages deriving from the illicit transfer of funds,” one user has launched a class-action lawsuit against cryptocurrency exchange Coinbase.
George Kattula, the plaintiff, asked for a jury trial against Coinbase in a document made on August 15 in the U.S. federal court for the Northern District of Georgia.
He said the cryptocurrency exchange lacked procedures for safeguarding consumers’ accounts.
Additionally, it “improperly and unjustly” shut customers out of their accounts at times when the cryptocurrency market was most volatile.
Moreso, Kattula said that Coinbase needs to be listed as a broker or dealer in the US since it facilitates the transfer of assets, in this instance, digital currency.
The complaint claimed that Coinbase “does not disclose that the crypto assets on its platform are securities.”
Indeed, by asserting that it does not need a registration statement for such securities and by declining to register as a securities exchange or a broker-dealer, Coinbase brazenly flouts federal and state regulations.
The filing further stated:
“Crypto assets resemble traditional securities because they represent an investment in a project that is to be undertaken with the funds raised through the sale of the crypto (whether it be a “token,” “stablecoin,” or cryptocurrency). Investors purchase crypto with the hope that the crypto’s value will appreciate as the issuer creates some use that gives the crypto value.”
During times of high market volatility, Coinbase has often gone down, which has led some consumers to file lawsuits.
A class action complaint said that the cryptocurrency exchange was operating as an unregistered securities exchange in March 2022 and was submitted to the Southern District Court of New York.
79 distinct cryptocurrencies are so listed as securities that are governed by the Securities and Exchange Commission.
Gary Gensler, the chairman of the SEC, has often said that “most” token project offers should be registered as securities under the agency’s regulatory authority.
The SEC issued accusations of insider trading in July against a former Coinbase product manager, his brother, and an acquaintance, alleging that at least nine of the 25 cryptocurrencies the group was purportedly using were securities.
Former Consumer Financial Protection Bureau director Kathy Kraninger said in a new study made public on Tuesday that case law may ultimately determine whether or not there is regulatory certainty in the cryptocurrency industry.
In a Friday filing, the defense team of a former employee of OpenSea who is also suspected of insider trading said that the prosecution merely brought charges in an effort to establish a legal precedent that nonfungible tokens were securities.
