Coinbase Faces Legal Heat As Class Action Lawsuit On SEC Disclosures Moves Forward

A U.S. judge recently let a class action lawsuit from Coinbase shareholders go ahead, adding to the company’s legal troubles. The lawsuit claims the exchange misled investors regarding its risks from regulations, especially those involving the U.S. Securities and Exchange Commission.

This ruling comes amid heightened regulatory scrutiny for Coinbase. Shareholders allege that the company made “materially false and misleading statements” concerning the probability of facing legal challenges from the SEC.

SEC Sued Coinbase For Alleged Violations Of Federal Securities Laws

According to a court report, the accuser who bought shares in 2021 argued that Coinbase ignored the risk of an SEC lawsuit. The risk became a reality eventually in 2023 when the firm was sued for allegedly violating the security laws of the government.

Brian Martinotti, the US District Judge presiding over the court case in New Jersey, overruled that the stakeholders presumably argued that Coinbase acted with negligence. The court discovered that Coinbase may have misunderstood the risk of an SEC enforcement action, even though the investors have been repeatedly assured that the crypto assets listed were not considered securities.

The class action lawsuit is one of several legal challenges Coinbase is currently grappling with. In addition to the shareholder suit, the exchange is locked in a legal battle with the SEC. In June 2023, the regulator filed a lawsuit against Coinbase, accusing it of violating US federal securities laws.

According to the update, Coinbase’s effort to dismiss the SEC’s charges didn’t succeed much. The judge revealed that the regulator’s arguments were enough to continue the case in court. This means Coinbase will keep dealing with the SEC’s claims, which could lead to several consequences.

Coinbase Faces A Lot Of Uncertainty Due To The Ongoing Legal Challenges

As governments and financial regulators watch the cryptocurrency industry more closely, Coinbase is under growing scrutiny. The company said the results of these legal issues could impact not just Coinbase, but the whole cryptocurrency market.

With these legal issues continuing, Coinbase is facing a lot of uncertainty. The company’s promises to investors about following regulations and the risks of SEC actions are now under close examination. The outcome of these cases will be important for Coinbase’s future.

In June, Coinbase filed lawsuits against the Federal Deposit Insurance Corporation and the SEC. According to an update, Coinbase claims both agencies failed to respond to Freedom of Information Act requests made to the US District Court for the Columbia District.