Coinbase Shares Jump 21% After Judge Axes Class Action
February 03 2023 - 2:24AM
Dow Jones News
By Dean Seal
Shares of Coinbase Global Inc. rose 21% to $79.50 after a
federal district judge dismissed a proposed class action accusing
the crypto exchange of selling tokens that qualified as
unregistered securities.
The suit, filed in October 2021, alleged that nearly 80 of the
digital assets traded on the Coinbase exchange fit the description
of a security under federal law, and that Coinbase therefore
violated the law by selling the tokens without proper
registration.
A New York federal judge ruled Thursday that the token buyers
behind the suit have made contradictory allegations between their
original complaint and a later amended complaint as to whether
Coinbase actually held title to or sold the tokens, rather than
just facilitate their trading on its exchange, in "an apparent
attempt to evade dismissal."
The judge further found that the terms of Coinbase's user
agreement, which state that only exchange users hold title over
tokens they trade, "flatly contradict" the lawsuit's
allegations.
Finding that further amendments would be futile, the judge
dismissed the case with prejudice.
The dismissal marks a somewhat rare legal victory for a major
player in the crypto space, which is under intense scrutiny by the
U.S. Securities and Exchange Commission following last year's
selloff in the cryptocurrency market.
SEC Chair Gary Gensler has repeatedly said that most
cryptocurrencies are unregistered securities and called for crypto
exchanges like Coinbase to register as securities exchanges. Under
Mr. Gensler, the agency has been cracking down on the largely
unregulated crypto industry.
Write to Dean Seal at dean.seal@wsj.com
(END) Dow Jones Newswires
February 02, 2023 11:59 ET (16:59 GMT)
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