A federal judge has ruled that Coinbase must confront a class-action lawsuit from shareholders, alleging the crypto exchange misled them regarding the risk of enforcement by the U.S. Securities and Exchange Commission (SEC). The lawsuit claims that Coinbase executives painted an overly optimistic picture about the improbability of SEC action, particularly concerning the classification of listed crypto assets as securities.
U.S. District Judge Brian Martinotti's ruling allows shareholders to pursue claims that Coinbase misrepresented the potential risk of asset loss in the event of bankruptcy. The judge noted that the plaintiffs adequately argued that Coinbase's communications misled them about the SEC's enforcement likelihood.
While the court dismissed several claims, it permitted the case to advance based on allegations related to the company’s portrayal of customer trust and its handling of proprietary trading statements. Coinbase has expressed confidence in its legal standing, emphasizing that the court's decision to allow some claims to proceed is based on the plaintiffs' allegations rather than factual determinations.
In a related development, Coinbase has sought to subpoena SEC Chair Gary Gensler for his communications regarding cryptocurrency, a move the SEC has criticized as an overreach into personal matters. The SEC has advised against this subpoena, labeling it excessively broad and intrusive.