Coinbase Stock Up 25% Following Class Action Lawsuit Dismissal
Shares of Coinbase, a crypto exchange, surged by over 25% on Thursday after a New York-based federal judge dismissed a lawsuit against the firm. Filed last March, the lawsuit alleged that about 75 tokens offered by Coinbase were unregistered securities sold directly to the exchange users.
The plaintiffs filed the lawsuit on behalf of Coinbase users seeking refunds on trading fees, losses they incurred on the exchange, and token purchases. However, Paul Engelmayer, a federal Judge, tossed out the case because the plaintiffs failed to prove that the exchange held the title of the tokens or was the immediate seller.
The lawsuit also accused Coinbase of pushing token sales by providing information about the cryptos that could be bought on the platform, such as token descriptions, their value propositions, and links to articles providing more insights about the tokens.
Coinbase Stock Saw a Major Rally Last Month
Coinbase’s stock price had a good run in January, alongside major cryptocurrencies like Ethereum and Bitcoin. The stock has more than doubled since the start of the year. It went from $33.4 to $81 per share in just a month, representing an increase of about 144%. But the stock is still down 75% from its peak price of $357.24 in 2021.
While delivering his verdict, Judge Engelmayer referenced a part of Coinbase’s user agreement that contradicts allegations in the lawsuit. Regarding how transactions are processed, the user agreement clearly states that the exchange only acts as an agent facilitating transactions between sellers and buyers.
When dismissing the lawsuit, Judge Engelmayer issued a court order that prevented the plaintiffs from filing such a claim again in a New York-based court. The move was welcomed by Coinbase’s lawyers, who had demanded the case be tossed out last May.
Coinbase and Its Other Lawsuits
While this court’s decision favored Coinbase, the exchange still has several lawsuits to deal with in other states like Georgia and New Jersey. The lawsuit in Georgia represents about 110 individuals collectively seeking $4.5 million. It accuses Coinbase of failing to secure users’ accounts and violating federal securities laws.
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