Global cryptocurrency exchange Coinbase stock experiences over 20% surge as the class action lawsuit against the firm gets dismissed.
Judge Paul Engelmayer of the United States District Court dismissed claims by users who claimed Coinbase offered them unregistered securities and also failed to register as a broker-dealer.
The lawsuit was filed on behalf of users who demanded refunds for token purchases, trading fees, and possible losses on the platform. The plaintiffs claimed Coinbase owned the crypto assets that it later directly sold to end users.
Judge Engelmayer dismissed the action because the plaintiffs failed to prove Coinbase was the “immediate seller” or “held the title” to those tokens.
The plaintiffs cannot re-file the same claim because the judge rejected the federal claims with prejudice. Judge Engelmayer referenced provisions of Coinbase’s user agreement that “flatly contradict” the claims made in the lawsuit.
The user agreement states that when using Coinbase for trading, users do not engage directly with the exchange and that Coinbase works as an “agent” to facilitate transactions between buyers and sellers.
Customers are also informed in the user agreement that they always retain control of their digital assets and that Coinbase never obtains them, the filing states.
Although this class action lawsuit was dismissed, Coinbase currently finds itself in a legal battle with other class action lawsuits in many jurisdictions, including Georgia and New Jersey.