Three Coinbase users are attempting to sue the company over 79 crypto tokens listed on the platform. They may be considered securities, and therefore, the sales could be deemed unlawful according to the suit.
The trio, Christopher Underwood, Louis Oberlander and Henry Rodriguez, filed the class action lawsuit last week in District Court for the Southern District of New York. They claim that everyone who purchased any of these assets should be reimbursed for business losses to the tune of $5 million collectively.
The list of cryptocurrencies is long and includes Polkadot (DOT), Dogecoin (DOGE), Chainlink (LINK), Solana (SOL), and Ripple (XRP), among others.
Titles or not titles
The plaintiffs claim that Coinbase should have registered with the Securities and Exchange Commission (SEC) as a national securities exchange. However, this would entail significant regulatory and reporting obligations usually applied to stock exchanges.
Additionally, the SEC has dragged its feet on regulating and categorizing crypto assets, and the U.S. government is still a long way off producing any semblance of a regulatory framework.
The lawsuit mentioned SEC Chairman Gary Gensler and his recent comments on Coinbase’s registration status.
“SEC chair Gary Gensler recently told the Senate Banking Committee that Coinbase had not registered with the SEC, “even though they have dozens of tokens that may be securities.”
The lawsuit is unlikely to go to trial or even go any further than this initial filing. Previous similar lawsuits have amounted to very little.
Last year, it was reported that five proposed class actions against crypto companies were voluntarily dismissed in New York federal court.
Coinbase continues to register
Coinbase continues to list various tokens, a far cry from where it was a few years ago when only a handful of assets could be traded.
One of the latest tokens to be listed is the newly launched ApeCoin for BAYC NFT collectors. Coinbase added APE under the “experimental asset label,” a special category for low liquidity assets that the company advises caution over.
The token saw massive volatility following the March 17 airdrop. Additionally, it caused Ethereum gas fees to spike as recipients rushed to withdraw them.
