On February 1, the Southern District Court of New York exonerated Coinbase from the class action lawsuit filed against the company by the U.S. Securities and Exchange Commission (SEC).
Earlier, Coinbase Global and CEO Brian Armstrong were charged with unregistered securities sale but the allegation was dismissed by Judge Paul Engelmayer based on the Securities and Exchange Acts.
The SEC’s suit argued that Coinbase engaged in the listing of 79 tokens which could be considered as securities being sold without due registration and prior risk warning to customers.
Contrarily, Judge Engelmayer dismissed the argument by referring to case law throughout the analysis.
It is instructive to note that the suit was filed with national claims and claims under California, Florida and New Jersey state law. While the national claims were dismissed with prejudice implying that the plaintiffs cannot file the same claims again.
The judge further stressed that the court had not exhausted all the available resources on the state claims.
In a separate development, a class action suit was filed against Coinbase in the Northern District Court of Georgia in August, on the basis that the crypto exchange breached users’ wallets which led to incurring losses.
Coinbase Sanctioned Amid Celebration
While the latest verdict is celebration-worthy for Coinbase, the U.S.-based crypto exchange has been fined 3.3 million euros by the Dutch central bank for the lack of due registration.
It was reported that the crypto exchange did not comply with local regulations for financial service providers before commencing operation in the country.
Undoubtedly, it has been a tough time for Coinbase having received several sanctions in recent times. On Jan. 5, Coinbase agreed to pay a $50 million fine as it reached a $100 million settlement with the New York Department of Financial Services (NYDFS).
The fine was due to a couple of fundamental deficiencies in Coinbase’s compliance program. More than any other time, the crypto exchange should be more clinical and compliant for the sake of transparency.
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