Coinbase Faces Lawsuit in New York After Judge Rejects Its Defense

A U.S. federal judge has ruled that Coinbase must face a lawsuit in New York, despite the company's defense that it doesn't qualify as a "statutory seller" under federal law.

The lawsuit accuses the exchange of selling 79 cryptocurrencies classified as securities without registering as a broker-dealer.

Judge Paul Engelmayer’s decision, issued on February 7, reverses a previous dismissal of the case, which was later revived by an appeals court. Engelmayer noted that Coinbase’s structure, where customers only engage with the platform, indicated that the exchange could be considered a seller in these transactions. In response, Coinbase insists it doesn’t list securities, claiming the ruling only narrows the case’s scope.

This lawsuit is just one of several legal challenges Coinbase is facing. The company has been locked in a dispute with the U.S. Securities and Exchange Commission (SEC) since June 2023, with the regulator accusing it of operating an unregistered securities exchange. Coinbase is also seeking to have cryptocurrency trades exempt from being classified as securities.

Additionally, the exchange has taken legal action against both the SEC and the Federal Deposit Insurance Corporation (FDIC), claiming they are trying to block crypto firms from accessing banking services and failing to comply with transparency laws. Despite these ongoing battles, Coinbase remains a key player in the U.S. crypto market, serving as the largest exchange and custodian for Bitcoin ETFs.