SEC’s case against Coinbase to proceed to jury trial

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28th March 2024 – (Hong Kong) Coinbase Global Inc. encountered a significant legal setback as a Manhattan federal court judge ruled that the Securities and Exchange Commission (SEC) can bring its allegations of unregistered securities sales to a jury. The decision, marking a win for the SEC, led to a slight decline in Coinbase shares by approximately 2%.

The lawsuit, filed in June, charged the cryptocurrency exchange with operating as an unregistered broker and exchange, a claim Coinbase attempted to dismiss. However, U.S. District Judge Katherine Polk Failla upheld that the transactions in question align with longstanding judicial criteria for what constitutes a security.

Judge Failla’s ruling specifically acknowledged the SEC’s allegations that Coinbase’s Staking Program involved the offering and sale of unregistered securities. Yet, she simultaneously dismissed another SEC claim accusing Coinbase of acting as an unregistered broker via its Wallet app.

Coinbase’s Chief Legal Officer, Paul Grewal, publicly responded, indicating the company’s readiness to challenge the SEC’s stance on crypto regulation and revealing the company’s anticipation of the legal confrontation.