Coinbase Wins Dismissal Of Lawsuit For Allegations Of Selling Securities

February 2, 2023 4:51 pm Comments

It looks like Coinbase was able to receive some good news as it was just announced that the company has managed to win dismissal of a lawsuit where consumers accused the exchange of selling unregistered securities.

This class action lawsuit was initially filed in a federal court in New York over a year ago and the fact that it was dismissed is likely a positive sign for the lawsuit between the SEC and Ripple.

After all, both cases focus on whether or not digital assets like XRP and considered securities or not.

These lawsuits had previously caused Coinbase to have to delist a significant amount of cryptocurrencies and many other exchanges have also faced similar allegations.

If it can be determined in a lawsuit that all digital assets are not considered securities, then all exchanges would be able to relist these crypto tokens and US investors would finally have access again.

Bloomberg reports:

Engelmayer said the terms of Coinbase’s user agreement “flatly contradict” allegations in the lawsuit that the company holds title to the digital assets that are bought and sold on the exchange. The judge also found that the platform didn’t actively solicit investments.

The suit alleges that Coinbase promoted the sale of the tokens by providing users with descriptions and their purported value, as well as by participating in promotions, giving news updates about cryptocurrency price movements and links to web stories.

But Engelmayer said those activities “are of a piece with the marketing efforts, ‘materials,’ and ‘services’” that courts have determined are not active solicitation.

A judge in the same court last April dismissed a similar lawsuit against Binance, the world’s largest crypto platform, finding that the claims were filed too late and that US securities laws didn’t apply because Binance is not a domestic exchange despite the fact that much of its infrastructure is based in the US.

After the dismissal of the lawsuit, it was recorded that shares of the company increased significantly.

Additionally, the Federal Reserve’s announcement that they were doing a rate hike once again in order to fight inflation also contributed to the increase where shares went up by more than 20%.

The battle is not completely won yet though as the lawsuit between the SEC and Ripple would ultimately by the main case that would determine whether or not many crypto assets are considered securities or not.

The result will ultimately affect the final asset list that major exchanges like Coinbase and Binance can provide to US customers.

The exchanges have recently recorded increased trading volume as well where Coinbase volumes had risen by 56% compared to the previous month which may be attributed to the recent rally in the crypto markets.

Yahoo concludes:

U.K. bank Barclays said in a note on Thursday that Coinbase volumes rose 56% in January from the previous month, and that “volumes are now near levels seen in October before the collapse of FTX, but remain below the average for 2022.”

“We might be getting six more weeks of winter, but it doesn’t seem like we will be seeing an ice age in crypto,” said Edward Moya, senior market analyst for foreign exchange market maker Oanda, referring to the latest Groundhog Day forecast. ”

January was a robust month for crypto and the [Federal Open Market Committee rate] decision helped keep all risky assets going higher,” he added.

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