A federal judge has ruled that crypto exchange Coinbase shareholders have presented reasonable claims, allowing a lawsuit to proceed against the prominent cryptocurrency exchange. The lawsuit alleges that Coinbase misled investors regarding the likelihood of the U.S. Securities and Exchange Commission (SEC) taking legal action against the company. However, the judge dismissed most of the other claims in the shareholder lawsuit.
Judge Orders Crypto ExchangeCoinbase to Face Shareholders
Shareholders accuse Coinbase of misleading them about the potential regulatory risks posed by the SEC. Last week, a U.S. judge partially denied Coinbase’s request to dismiss the class-action lawsuit filed by its shareholders. In the court document, it was stated that “the plaintiffs have adequately alleged that the defendants misled investors by repeatedly emphasizing that the cryptocurrencies listed were not securities, thereby painting an overly optimistic and misleading picture regarding the likelihood of an SEC enforcement action.”
As previously reported by Turkish NY Radio, a group of Coinbase shareholders filed the lawsuit in 2022, alleging that the exchange made “materially false and misleading statements” about its operations and the regulatory risks it faced. U.S. District Judge Brian Martinotti of the New Jersey District Court ruled that the plaintiffs had a plausible case that Coinbase acted “negligently.” Despite this, the judge ruled that many of the claims presented in the case were insufficient.
Coinbase Still Confident Despite Legal Challenges
The SEC filed a lawsuit against Coinbase in June 2023, accusing the exchange of violating federal securities laws. Coinbase also lost most of its motion to dismiss the SEC case, with the judge ruling that the SEC had raised reasonable arguments that would be better explored in court. The class-action lawsuit stretches back to 2021, the year the plaintiffs first purchased shares. However, in July 2023, there were some developments, and Coinbase filed a briefing in December 2023, requesting the case’s dismissal.
In Judge Martinotti’s latest document, it was shown that the court partially accepted Coinbase’s dismissal request. Only the first count, which was based on “statements emphasizing customer confidence and proprietary trading declarations,” was accepted, while all other counts were rejected. A spokesperson for Coinbase commented on the case, stating:
“The court agreed that the majority of the plaintiff’s claims should be dismissed. It’s important to note that the remaining parts were allowed to proceed only due to the procedural nature of the dismissal request. The court draws inferences based on the plaintiff’s allegations, not on facts. We are confident in the facts and the law, and we look forward to proving the rest of our case. We appreciate the court’s careful consideration.”
