A newly filed class action complaint alleges that Coinbase violated U.S. securities laws.
The complaint, filed Friday in the San Francisco Division of the Northern District of California, alleges that the top U.S. crypto exchange has operated as “part of a shadowy crypto ecosystem that operates just outside the law.”
“The 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 that it would eventually be caught in the lie, ‘it is better to ask for forgiveness then permission.’
Coinbase has knowingly, willfully and repeatedly violated state securities laws since it began doing business.”
The complainants accuse the exchange of offering numerous unregistered “digital asset securities,” including the layer-1 blockchain projects Solana (SOL), NEAR Protocol (NEAR), Algorand (ALGO), Stellar (XLM) and Tezos (XTZ); the blockchain scaling solution Polygon (MATIC); the decentralized exchange Uniswap (UNI); and the Ethereum (ETH)-based virtual reality platform Decentraland (MANA).
The US Securities and Exchange Commission (SEC) has also accused Coinbase of violating securities laws and filed a lawsuit against the exchange in June 2023.
Coinbase has argued that trading digital assets does not qualify as an “investment contract” under the Howey Test, an assessment created by the Supreme Court more than 90 years ago to determine whether assets should be classified as securities.
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Generated image: Midjourney