March 18, 2022

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Coinbase Faces Class Action Lawsuit for Selling Unlicensed Crypto Assets

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Coinbase Faces Class Action Lawsuit for Selling Unlicensed Crypto Assets
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Coinbase Faces Class Action Lawsuit for Selling Unlicensed Crypto Assets

U.S. crypto exchange giant Coinbase has been hit with another class-action lawsuit, with the plaintiffs claiming that the crypto exchange sold unlicensed crypto assets.

Coinbase Lists 79 Unlicensed Cryptos

The lawsuit, filed to the Southern District Court of New York by Christopher Underwood, Louis Oberlander, and Henry Rodriguez, claims that Coinbase listed 79 tokens on its platform that could violate state and federal laws.

According to the plaintiffs, Coinbase sold these unlicensed crypto assets without properly warning its users of the risk involved when acquiring them.

The lawsuit, which contains a 255-page document, makes a separate case for each token in question that it qualifies as a security under the Howey test

Coinbase “Sold” Unlicensed Crypto

In addition to claiming that Coinbase listed the unlicensed crypto, the suit claims that Coinbase is also the “actual seller” of these assets.

According to the argument, when an exchange credits or debits parties involved, rather than facilitating direct exchange between the buyer and seller, it becomes the de facto seller of the asset.

As such, the plaintiffs have filed to claim reimbursements for trading collective losses of $5 million.

On the Flipside

Pointing to similar cases in the past, many have suggested that the case is unlikely to go to trial or get further than this initial filing.

Why You Should Care

Contrary to its earlier stance, Coinbase has increased the number of token listings on its trading platform, leading to cases such as this.

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