Coinbase Gets Class-Action Lawsuit for Offering 79 Security Tokens

Coinbase and its CEO, Brian Armstrong, have become the target of a fresh lawsuit, which accused the exchange of selling several unregistered securities.

Lead plaintiffs and bereaved Coinbase users Christopher Underwood, Louis Oberlander, and Henry Rodriguez claim that between October 8, 2021, till today, Coinbase has allowed its users to trade 79 cryptocurrencies without disclosing their securities status.

The litigants added that these crypto securities were not properly registered with the US Securities and Exchange Commission (SEC), or any other regulatory agency for that matter and that Coinbase, itself, was not registered as a securities exchange or a broker-dealer. They also claim that “Coinbase’s sale of these tokens violates both federal and state law.”

The class-action suit covers all individuals or entities that have traded any of the 79 alleged security tokens in Coinbase or Coinbase Pro during the class period. The plaintiffs argued:

“Purchasers do not have access to the disclosures that accompany the issuances of traditional securities. Rather, investors receive — at most — only the so-called whitepapers, which describe the token, but do not satisfy the requirements for a prospectus under federal and state securities laws.”

The 79 cryptocurrencies in question include 1INCH, AAVE, ACH, ADA, AGLD, ALGO, AMP, ANKR, ARPA, ATOM, AUCTION, AXS, BAL, BAND, BAT, BNT, BOND, BTRST, CGLD, CLV, COMP, CRO, CRV, CTSI, CVC, DNT, DOGE, DOT, ENJ, EOS, FARM, FET, FIL, FORTH, GNT, GRT, GTC, ICP, IOTX, KEEP, KNC, LINK, LOOM, LRC, MANA, MATIC, MKR, MLN, NKN, NMR, NU, OGN, OMG, ORN, OXT, PLA, POLY, QNT, QUICK, RARI, REN, REP, RLC, SHIB, SKL, SNX, SOL, STORJ, SUSHI, TRB, TRIBE, UMA, UNI, XLM, XRP, XTZ, XYO, YFI, and ZRX.

Coinbase Litigants Expect Reimbursement for Damages

The suit cited SEC Chairman Gary Gensler several times, who has said on several occasions that crypto investors do not have enough protection. He also mentioned that several crypto trading platforms have 50 to 100 tokens listed, many of which are likely securities.

The lawsuit document also noted:

“This case is a class action where the aggregate claims of all members of the proposed classes exceed $5,000,000, exclusive of interest and costs.”

The litigants are looking to “recover damages, consideration paid for tokens, and trading fees, together with interest thereon, as well as attorneys’ fees and costs, to the fullest extent permitted by law.”