Three personnel who purchased crypto via Coinbase (a prominent crypto exchange) submitted a class action on 11th March under the New York’s Southern District Court accusing that the platform is running its operations for unregistered exchange of securities. The legal case enlists 79 coins that are claimed by it as securities and being sold by Coinbase, resulting in an infringement of the federal as well as state-based regulatory laws, whereas the consumers were not cautioned about the hazards included in the respective purchases thereof.
Plaintiffs Henry Rodriguez, Louis Oberlander, and Christopher Underwood, represented on the behalf of Silver Golub & Teitell (a law company based in Connecticut), submitted the modified complaint with mentioning Coinbase and Brian Armstrong (the CEO of the exchange) as defendants. The document, which is consisted of 255 pages, separately debates every liable token that comes under the category of a security according to the Howey test.
Apart from this, the case notes that the exchange has the status of an actual seller on performing any exchange, debiting and crediting the participants engaged with the transfer in the accounts on the exchange, instead of delivering a straight exchange among the respective parties. A counsel under Seward & Kissel – Philip Moustakis – stated that the legal case does not have an element of surprise. Ultimately, the Securities and Exchange Commission (SEC) has indicated its intention to follow the investigations or take measures against crypto exchanges.
Other such lawsuits emerged following the SEC’s crackdowns over the initial coin offerings (ICOs) during 2018, as per Moustakis. Nonetheless, while the Securities Agency has sought legal suits to confront token issuers, as is the case with is the ongoing clash with Ripple, as well as market members including BlockFi, offering lending products through digital assets, no action has yet been taken on the behalf of the SEC against a crypto exchange.
Moustakis disclosed that a thorough and separate investigation of the digital tokens signifies the requirement for enhanced regulatory transparency. Until and unless the provision of additional guidance on the behalf of the SEC for the token issuers, crypto market participants, exchanges, as well as lending products’ compliance, the question of any specific crypto transfer or asset’s status of being security is to be litigated one by one, according to him.
This is so as while the tests of the assets to check for their position of being securities are dependent on the circumstances, the facts, as well as the evaluators, they result in diverse viewpoints.
At Tokenhell, we help over 5,000 crypto companies amplify their content reach—and you can join them! For inquiries, reach out to us at info@tokenhell.com. Please remember, cryptocurrencies are highly volatile assets. Always conduct thorough research before making any investment decisions. Some content on this website, including posts under Crypto Cable, Sponsored Articles, and Press Releases, is provided by guest contributors or paid sponsors. The views expressed in these posts do not necessarily represent the opinions of Tokenhell. We are not responsible for the accuracy, quality, or reliability of any third-party content, advertisements, products, or banners featured on this site. For more details, please review our full terms and conditions / disclaimer.