Major cryptocurrency exchange Coinbase has been the subject of a lawsuit over allegations that 79 altcoin projects it sells on the platform are securities. Now, there has been a new development about this case: It was rejected by the court. Here is the latest in the case and a list of affected altcoins…
Good news for bitcoin and altcoin exchange
A proposed class action lawsuit against cryptocurrency exchange Coinbase, Coinbase Global, and CEO Brian Armstrong for the alleged sale of unregistered securities was dismissed on February 1 in the United States Southern District Court of New York. cryptocoin.com As we reported, according to the lawsuit filed on March 11 last year, the tokens listed on Coinbase were securities sold without proper registration and customers were not warned of their risks.
The lawsuit brought charges under the Securities Act of 1933 and the Exchange Act of 1934, and used the Howey test established by the U.S. Supreme Court in 1946 to identify tokens. Plaintiffs argued separately for each token. Judge Paul Engelmayer said in his decision regarding the Howey test:
If this case were to reach summary judgment, it would be a center of contention battleground.
Claims against Coinbase were flawed from the start
However, for the purposes of his analysis, the judge assumed that the tokens were indeed securities. He stated that the Coinbase user agreement contradicted the plaintiffs’ claim that Coinbase was the “true seller” of the tokens. Also, Coinbase did not request a sale under a strict legal definition. Thus, claims under the Securities Act were dismissed. The judge stated that the claim under the Exchange Act alleges the existence of a contract involving a prohibited transaction. It stated that only the user agreement was responsible for this claim and that it “does not require any illegal actions”.
The plaintiffs’ representative apparently became aware of the flaw in their claims after the lawsuit was filed. The lawsuit was filed with national claims under the state laws of California, Florida, and New Jersey. National claims were denied from the start. that is, the plaintiffs cannot raise the same claims again. The state’s claims were dismissed without prejudice, as the judge ruled that the court did not “devote the necessary resources to resolve” the state’s claims.
In August, a class action lawsuit was filed against Coinbase in the Northern District Court of Georgia alleging that the exchange did not do enough to protect user wallets and locked users into their accounts during high market volatility. It also claimed that “Coinbase does not disclose that crypto assets on its platform are securities.”
List of 79 altcoins: Which would be affected?
The cryptocurrencies claimed to be unregistered securities sales in the lawsuit filed against Coinbase were: 1INCH, AAVE, ACH, ADA, AGLD, ALGO, AMP, ANKR, ARPA, ATOM, AUCTION, AXS, BAL, BAND, BAT, BNT, BOND , BTRST, CGLD, CLV, COMP, CRO, CRV, CTSI, CVC, DNT, DOGE, DOT, ENJ, EOS, FARM, FET, FIL, FORTH, GNT, GRT, GTC, ICP, IOTX, KEEP, KNC, LINK , LOOM, LRC, MANA, MATIC, MKR, MLN, NKN, NMR, NU, OGN, OMG, ORN, OXT, PLA, POLY, QNT, QUICK, RARI, REN, REP, RLC, SHIB, SKL, SNX, SOL , STORJ, SUSHI, TRB, TRIBE, UMA, UNI, XLM, XRP, XTZ, XYO, YFI, ZRX.
The continuation of the court case against Coinbase could negatively impact the above cryptocurrencies and the cryptocurrency market in general. For example, XRP, as it is known, saw a huge loss in value in the securities lawsuit it faced with the SEC. In fact, the lawsuit negatively affected the cryptocurrency market for a short time. Because most people rightly do not want to confront regulators.
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