- Coinbase Inc won the dismissal of the lawsuit alleged by consumers over the unregistered securities.
- The lawsuit was filed on October 21 in the Federal Court in New york.
- Class-action lawsuit investigates the damages caused by the illegal contracts-based sales and soliciting of the 79 digital assets.
Coinbase Inc, a publicly traded cryptocurrency company in the United States, has won the dismissal of a consumer lawsuit filed in October 2021. In detail, consumers accused the cryptocurrency exchange of promoting the sale of “unregistered securities” on its website.
In October 2021, the proposed class-action suit was filed in the federal court in New York.
Reportedly, the class-action suit investigated the damages caused by the “sale or soliciting of 79 digital assets” aggregated to illegal contracts due to the unregistered securities with the US Securities and Exchange Commission.
In connection with the lawsuit, US District Judge Paul A. Engelmayer said he regarded that digital tokens were used for the “purpose of the dismissal request by Coinbase”. Engelmayer was unsure about digital tokens being “actual securities” and asserted that if the suit had proceeded, this question would have turned out to be a “central battleground”.
Notably, the accusation was based on the sale of the tokens facilitated by Coinbase. The platform shared to the users “descriptions and their purported value” along with the “participation in promotions” and provided the latest news regarding the price movements of the cryptocurrency and web story links.
Engelmayer rejected the claims with the assertion that those allegations were not “active solicitation”:
These activities of an exchange are of a piece with the marketing efforts, ‘materials,’ and ‘services’ that courts … have held insufficient to qualify defendants as sellers.
Furthermore, Engelmayer added that the arguments such as “the company holds title to the digital assets that are bought and sold on the exchange “contradict flatly the terms of Coinbase’s user agreement. Engelmayer rejected the idea of the “solicit investments” of the platform.
Last April, a similar lawsuit against the world’s largest crypto platform, Binance was rejected by a judge in the same court. The lawsuit against Binance was rejected on the grounds that US securities laws were not applicable to the “non-domestic exchange” platform and also the “claims were filed too late”.