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02/09 08:58

Prominent crypto exchange Coinbase is set to face

Prominent crypto exchange Coinbase is set to face class action against some of its customers for allegedly selling securities as an unregistered broker-dealer. This latest development comes amid the exchange’s interlocutory appeal in an ongoing case with the U.S. Securities and Exchange Commission (SEC). Related reading: Ripple vs. SEC lawsuit: XRP price waives latest rules against Coinbase, denies motion to dismiss February 7, Reuters 79 The tokens were being considered by a group of customers. Judge Engelmayer rejected the defendant’s argument that it was not a “legal seller” under U.S. securities laws because it never disclosed the names of all the tokens purchased by those customers. Rather, the district judge emphasized that Coinbase was indeed a direct seller because customers on its platform are said to only be transacting with “Coinbase itself.”  Interestingly, this case was originally dismissed by Judge Engelmayer in February 2023. However, the 2nd U.S. Circuit Court of Appeals in Manhattan revived the case due to the original ruling’s reliance in December 2021 on the user agreement. Following Engelmayer’s latest ruling, the American Exchange is bracing for a potentially intense legal battle. So far, Coinbase has claimed not to “list, offer, or sell securities on its exchange,” expressing its willingness to be clearly named in the district court. Following ongoing legal challenges, Coinbase also faces a more serious lawsuit from the SEC, which accuses the Exchange of operating as an unregistered broker-dealer and illegally selling unregistered securities through its articles program. That case is currently on hold as Coinbase has successfully secured a permanent interlocutory appeal challenging the application of the Howey test to digital assets under the U.S. Securities Act.  A favorable ruling for the US exchange in this appeal could mean that crypto sales are not considered securities transactions, thereby undermining the SEC’s claim in this case and many other crypto lawsuits. Related Reading: Sec Crypto Task Force Website Launches: Hester Peirce Shares Vision for Digital Assets Potential $1 Trillion Company? In other news, Bitwise chief investment officer and popular crypto figure Matt Hougan has suggested that Coinbase could become a $1 trillion company. Hougan explains that the anti-crypto stance under the previous US administration created a regulatory moat around Coinbase, resulting in high margins among its few competitors. However, the exchange’s battle with regulators under this “harsh” regime has now positioned the firm as a potential industry leader in this pro-crypto regulatory environment.  A battered CIO backs Coinbase’s potential to become a major financial titan if it maintains its current mode of operation amid a flourishing crypto market. At press time, the total Crypto market cap is worth $3.09 trillion, up 0.08% over the past day. Total Crypto Cap is valued at $3.09 trillion on the 4-hour chart | Source: Overall chart on TradingView.comfeated Image by Shutterstock, Chart by TradingView

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