The 2nd US Circuit Court of Appeals allowed the class action suit against Coinbase to continue. In this complaint, the cryptocurrency exchange is being sued for selling or soliciting 79 digital assets that have not registered with the US Securities and Exchange Commission (SEC). However, the designated court confirmed Judge Paul A. Engelmayer’s initial arrest of charges made under the US Securities Exchange Act.
Court revisits Coinbase case on crypto promotion
The case known as Oberlander vs. Coinbase Global Inc., complains about the promotion of cryptocurrencies with Coinbase. On the other hand, the defendants state that this is just Coinbase’s summary of a crypto trend and has nothing to do with creating binding contractual obligations. On the contrary, the appeals court thought the dismissal in December 2021, on the grounds of the user agreement, was justified. The Company now has an intermediary district court decide on the correct user agreement to apply to the potential dismissal of this trial.
Coinbase’s Chief Legal Officer Paul Grewal welcomed the judgment with the main point that Coinbase is not liable in this case of secondary digital asset trading because of its nature of a secondary trading platform. He pinpointed the inbuilt nature of the exchange contracts users agree to prior to the engagement.
We appreciate the Second Circuit confirming today what is clear under the federal securities law: there's no private liability for the secondary trading of digital assets on exchanges like Coinbase. Why? Because contracts matter. 1/2
— paulgrewal.eth (@iampaulgrewal) April 5, 2024
Appeals court reexamines Coinbase’s digital asset practices
Such lawsuit shed the light on the constantly evolving supervision of the cryptocurrency exchanges and the ecosystem as well. The ruling of the appellate court requiring the reexamination of the case is the indicative of the fact that the digital asset protocols and user consent are comparably complex. With a review of the district court’s decision, Coinbase believes that it has a strong legal stance and all the contracts it has established with its users.
The end result of this trial shall be very crucial to whether Coinbase continues to exist as an exchange or not, and also the entire digital asset trading space, especially in how digital asset platforms operate and comply with existing regulations. Throughout the trial, the traders have their eyes on any move that may affect digital asset transactions and regulation.
