Coinbase has achieved a significant victory in an ongoing lawsuit, where it was accused of selling tokens as unregistered securities.
The crypto-exchange, therefore, will not have to compensate any plaintiff.
Summary
Coinbase and its victory: the sale of tokens and crypto does not violate the Security Exchange Act
Coinbase has achieved a major victory in the ongoing lawsuit that accused it of selling tokens and crypto as unregistered securities.
And indeed, the United States Court of Appeals for the Second Circuit ruled in favor of Coinbase, confirming that secondary sales of cryptocurrencies on its platform do not violate the Securities Exchange Act.
Basically, the plaintiffs would be a national group of individuals who exchanged tokens on Coinbase from October 8, 2019 to March 11, 2022. These individuals would have accused Coinbase of selling crypto as unregistered securities, violating securities laws.
Not only that, such complainants would also have filed claims for compensation under state law related to securities legislation in California, Florida, and New Jersey.
On the other hand, Coinbase has always argued that secondary sales of cryptocurrencies do not meet the criteria for securities transactions, challenging the relevance of securities regulations.
Finally, the verdict that vindicates Coinbase has arrived, clearing it of all charges and marking its victory in the crypto world.
Coinbase wins the case but there is a need to clarify the regulation of security tokens
Actually, it is important to note that the court has established that there is a potential liability of Coinbase for selling unregistered securities. However, it has dismissed the charges and the request for compensation, due to lack of evidence of the specific contracts of the cryptocurrency transactions.
In this regard, the legal officer of Coinbase, Paul Grewal, wrote:
“We appreciate that the Second Circuit has confirmed today what is clear under federal securities law: there is no private liability for the secondary trading of digital assets on exchanges like Coinbase. Why? Because contracts matter.”
Basically, Coinbase won primarily because there is no regulatory clarity regarding the regulation of security tokens and then because the plaintiff group has evolved over time, bringing complications in reworking their various versions.
Official registration as a restricted dealer in Canada
While in the USA, its “Motherland”, Coinbase is in a constant struggle for its survival, in Canada, the crypto-exchange has obtained official registration as a Restricted Dealer.
Basically, the authorities of Canada have granted Coinbase the opportunity to operate in the country, thus confirming Coinbase as the largest cryptocurrency exchange registered in the Canadian jurisdiction.
Not only that, Coinbase is negotiating with the major Canadian banks, trying to obtain their support for the development of the crypto ecosystem in Canada.
