The suit is brought on behalf of all Coinbase users and complains that the cryptocurrency exchange has been selling securities that are unregistered with the U.S. Securities and Exchange Commission (SEC), amounting to 15 violations of securities laws, including the requirement for those selling securities to register as an exchange. Coinbase CEO Brian Armstrong is also named as a defendant in the action, which accuses the CEO of knowing “the existence of the facts that give rise to the liability here because he knew that Coinbase was not registered as a securities exchange or as a broker-dealer and that it sold the Tokens, which were unregistered securities.”
The list of 79 alleged securities includes DOGE, LRC and XRP. The suit uses a number of criteria to distinguish the assets including in the suit from those which are not, and addresses each of the 79 listed assets individually. For example, most of the assets complained of in the suit are ones with little or no utility and the trading of which is focused on investment profit, an argument which speaks directly to the limbs of the Howey test for securities. Similarly, the suit argues that any token which was issued via ICO to be a security, a line the SEC has previously argued with success in its action against Telegram.
‘Enforcement 40’ for 2020
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