Silver Golub & Teitell LLP (“SGT”) has filed a class action alleging that digital asset trading platform Coinbase Global Inc. (“Coinbase”) illegally “dozens” of “coins”, “tokens” and other digital assets on its platform that are securities despite Coinbase’s refusal to register with the United States Securities & Exchange Commission (“SEC”) as a national securities exchange or broker-dealer required by federal law. The action seeks to recover damages suffered and fees paid in connection with Coinaser users’ digital asset transactions. The case is , Underwood et al v. Coinbase Global, Inc., 1:21-cv-08353 (S.D.N.Y.). SGT issued a press release on this action on October 13, 2021.
If you lost money trading any of the coins, tokens, or digital assets listed on Coinbase (except Bitcoin and Ethereum) within the past 12 months on Coinbase and want to discuss your rights, contact one of the attorneys at Silver Golub & Teitell LLP today by telephone at (203) 325-4491 or email SGT Partner Ian W. Sloss at email@example.com.
Regulators, including the SEC, have increased their scrutiny of digital asset trading platforms in recent months. Multiple trading platforms, including BlockFi, are facing inquiries and/or regulatory actions because state regulators believe the lending products they offer constitute securities whose offer and sale has not been registered by the issuer.
Additionally, in August, the SEC settled charges it brought against online digital asset trading platform Poloniex for operating as an unregistered securities exchange. Ramping up the pressure on exchanges, in prepared remarks published Monday, September 13, 2021, SEC Chairman Gary Gensler criticized the lack of compliance in the cryptocurrency and digital asset industry, stating:
I’ve suggested that platforms and projects come in and talk to [the SEC]. Many platforms have dozens or hundreds of tokens on them. While each token’s legal status depends on its own facts and circumstances, the probability is quite remote that, with 50, 100 or 1,000 tokens, any given platform has zero securities. Make no mistake: To the extent that there are securities on these trading platforms, under our laws they have to register with the Commission unless they qualify for an exemption.
On Tuesday, September 14, 2021, Gensler specifically singled out Coinbase, stating “[t]hey haven’t yet registered with [the SEC], even though they have dozens of tokens that may be securities.” The SEC has previously noted that online platforms which list assets that qualify as “securities” for trading must be registered, pursuant to Section 6 of the Exchange Act, with the SEC as a “National Securities Exchange.” Laws such as the Securities Exchange Act of 1934 (the “Exchange Act”), which requires exist for the protection of United States investors.
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