Coinbase sees revival of class action lawsuit filed by consumers alleging illegal contracts

The 2nd US Circuit Court of Appeals reversed a ruling that dismissed a class action lawsuit against Coinbase.
The proposed lawsuit seeks damages from the sale of 79 digital assets.
Coinbase CLO applauds the Second Circuit for confirming that exchange has no private liability for the secondary trading of digital assets.

Coinbase is facing a class action lawsuit brought against it by users seeking damages arising from the sale or solicitation of 79 digital assets that they allege amount to illegal contracts because the platform is not registered with the US Securities and Exchange Commission.

While the 2nd US Circuit Court of Appeals revived the lawsuit, and this may look like a setback for Coinbase, it affirmed Judge Paul A. Engelmayer’s dismissal of claims raised under the US Securities and Exchange Act.

Coinbase faces heat from class action lawsuit revival

A class action lawsuit against the exchange that was dismissed by a Judge in 2021 has been revived by the 2nd US Circuit Court of Appeals. While this may appear as a setback for the exchange platform, Chief Legal Officer Paul Grewal applauded the court for confirming that exchange has no private liability for the secondary trading of digital assets on its platform.

We appreciate the Second Circuit confirming today what is clear under the federal securities law: there's no private liability for the secondary trading of digital assets on exchanges like Coinbase. Why? Because contracts matter. 1/2
— paulgrewal.eth (@iampaulgrewal) April 5, 2024

The consumers who filed the class action lawsuit failed to identify specific contracts that meet the requirements for cancellation under the law, according to the panel’s ruling.

The 2nd US Circuit Court of Appeals said that the federal judge in New York who dismissed the suit last year shouldn’t have relied on a December 2021 user agreement. The three-judge appeals panel sent the case to the district court to help determine which user agreement should be used to determine whether the class-action can be dismissed.

The lawsuit, Louis Oberlander vs. Coinbase Global Inc. alleges that Coinbase promoted the sale of the tokens by providing users with descriptions and their purported value. The exchange allegedly engaged in promotions, shared news and updates about crypto price movements to users and shared web stories.

CLO Grewal’s comments show how the exchange is prepared to tackle the lawsuit, and believes in “contracts” that users enter in, while using the exchange platform.

Share: Cryptos feed

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram