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Three Coinbase users are accusing the company of selling unlicensed securities and are seeking at least $5 million on behalf of themselves and everyone else who purchased Dogecoin<\/a><\/span>, Solana<\/a><\/span>, Cardano<\/a><\/span>, or more than 70 other tokens on the platform.<\/p>\n The users claim<\/a> that, since Coinbase is allegedly selling securities (also known as investment contracts) the company should have registered with the SEC as a national securities exchange\u2014a designation typically reserved for stock exchanges, and one that would subject Coinbase to a raft of regulatory and reporting obligations.<\/p>\n According to the Coinbase users who filed the suit, they and everyone else who bought the tokens in question should be compensated for any losses they suffered while trading, and for other unspecified damages. They claim Coinbase is violating both federal and state securities laws, and are also asking the judge to order the company to stop the selling the tokens, which also include Chainlink<\/a><\/span>, Polygon<\/a><\/span>, and Shiba Inu<\/a><\/span>.<\/p>\n While all of this could, in theory, pose an existential threat to Coinbase’s business, it’s unclear how much traction the lawsuit will get, especially as similar lawsuits have flamed out<\/a> in the past. Last April, for instance, at least seven class action lawsuits against crypto exchanges were thrown out by the courts or else withdrawn by plaintiffs.<\/p>\n <\/p>\n Whatever its merits, however, the new lawsuit does serve to highlight the legal exposure Coinbase faces as a result of its decision to aggressively list dozens of new tokens<\/span><\/a> even as the legal status of those tokens was unclear. While SEC officials have suggested that Bitcoin<\/span><\/a> and Ethereum are not securities<\/span><\/a> and don’t need to be registered with the agency, that’s not the case with the thousands of other crypto assets that trade everyday\u2014some of which clearly are securities, and some of which are in a grey area.<\/p>\n\nThe best of Decrypt straight to your inbox.<\/h3>\n
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