Coinbase sued in US for allegedly ‘defrauding’ investors: details

Just a week after Coinbase reported soaring first-quarter revenue, the exchange has found itself embroiled in a lawsuit. A group of six users of the exchange have alleged in a lawsuit that Coinbase, under its CEO Brian Armstrong, is violating state securities laws and defrauding users by claiming that the exchange offers crypto tokens as securities. I don’t sell. In the US, securities are assets in which investments are made with the expectation of making a profit from the efforts of an entity other than the investors.

The lawsuit against Coinbase has been filed in the United States District Court for the Northern District of California San Francisco Division. The document claims that Solana, Polygon, Near Protocol, Decentraland, Algorand, Uniswap, Tezos and Stellar are listed as securities on the exchange.

“Coinbase has been part of a shadowy crypto ecosystem operating just outside the law since it was formed 10 years ago. Its entire business model is built on a lie and a dream: the lie is that “we don’t sell securities,” and the dream is that, knowing it will eventually be caught in a lie, ‘it’s better to beg for forgiveness than permission.’ ”, the plaintiff has Said In his case.

The lawsuit claims that when drafting its user agreements with investors and other customers, Coinbase specifically identifies the crypto assets it sells as ‘securities’, despite it never doing so itself. has not registered its people or the crypto securities it sells. The document also highlights that Coinbase, in its user agreement, acknowledges that it is a ‘securities broker’.

Based on these allegations made against Coinbase, the plaintiffs are seeking complete dismissal as well as injunctive relief via a jury trial. cointelegraph Said in his report. According to Cointelegraph, the exchange has said that the sale of secondary crypto assets does not meet securities transaction criteria. Meanwhile, the exchange has not issued any official statement commenting on the lawsuit.

This is not the first time Coinbase has been dragged under legal scrutiny for allegedly violating US securities laws through illegal trading operations. In January this year, a federal judge in Manhattan questioned Coinbase and the US securities regulator over their differing views on whether and when digital assets are securities. Commenting on the SEC filing a lawsuit against Coinbase last year, the exchange urged the US court to dismiss the SEC’s lawsuit.

Despite regular clashes with authorities, Coinbase managed to turn a profit in the first quarter of 2024. The exchange claims to have earned $1.6 billion (roughly Rs. 13,365 crores) in total revenue and $1.2 billion (roughly Rs. 10,023 crores) in net income. For 2024 Q1. The exchange reported $1 billion (about Rs 7,500 crore) in adjusted earnings before interest, taxes, depreciation and amortization.