Three new class action lawsuits have been filed against Coinbase and its executives on Thursday after the company reaches the Supreme Court to settle two pending class action lawsuits related to scam and Dogecoin sweepstakes, respectively.
The latest class action lawsuits accuse Coinbase of false and misleading statements, non-disclosure of new bankruptcy risk terms and conditions, violating securities law, and failing to communicate regulatory and governmental scrutiny and enforcement action.
Coinbase Faces Three Class Action Lawsuits
Troubles for crypto exchange Coinbase don’t seem to end soon, as three new class action lawsuits have been filed in the U.S. District Court for the District of New Jersey on August 4. The class action lawsuits have been brought by law firms Bragar Eagel & Squire PC, Robbins Geller Rudman & Dowd LLP, and Pomerantz LLP.
The class action lawsuits represent “all persons and entities who purchased or otherwise acquired Coinbase securities” between April 14, 2021 and July 26, 2022. Moreover, the last date for plaintiff addition is October 13. In fact, the class action by Robbins Geller Rudman & Dowd already has a plaintiff, with the case filed as Patel v. Coinbase Global, Inc.
Coinbase and its executives are accused of making false and misleading statements regarding the company’s operations and compliance policies. Also, failing to communicate new bankruptcy risks disclosure, which makes customers’ custodially held crypto assets subject to bankruptcy proceedings and customers would be treated as unsecured creditors.
As reported earlier, Reddit users have raised concerns over Coinbase having a Celsius-like policy that makes consumers’ assets become the company’s property in case of bankruptcy.
Moreover, the crypto exchange is also charged with violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 for allowing unregistered securities trading.
Lawsuits claim Coinbase failed to disclose risks of regulatory and governmental scrutiny and enforcement action. Also, making public statements that the company is stable and not at risk. Moreover, the crypto exchange is also under SEC investigation for listing Terra’s UST and LUNA.
Coinbase shares have dropped below $50 as a result of misleading statements and failure to disclose the truth. Coinbase CEO Brian Armstrong had come forward after the drop in share price, saying:
“We should have updated our retail terms sooner, and we didn’t communicate proactively when this risk disclosure was added. My deepest apologies, and a good learning moment for us as we make future changes.”
Crypto Exchange Under Trouble Due to SEC and Other Lawsuits
The SEC is investigating Coinbase for listing unregistered securities. While Coinbase’s executives have neglected that it lists securities as the SEC itself had reviewed the securities listing process of the exchange. The SEC is also investigating all U.S.-based crypto exchanges and may file a lawsuit against them.
Meanwhile, Coinbase has partnered with asset manager BlackRock to offer crypto services to its clients. The share prices have risen higher as a result.
On August 4, Coinbase moved to the Supreme Court to settle the two class actions lawsuits as arbitration after federal judges in California refused cases to be heard in arbitration.
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