A U.S. judge has ruled that crypto exchange Coinbase must face a class action lawsuit filed by customers in New York, Reuters has reported.
The lawsuit alleges that Coinbase illegally sold securities and that it acted as a direct seller.
In a ruling delivered on Feb. 7, U.S. District Judge Paul Engelmayer rejected Coinbase’s argument that it is not a statutory seller under U.S. federal securities law. The exchange also contended that it never transferred the title of the 79 tokens listed in the lawsuit, which customers traded.
However, the judge pointed to the argument that “customers on Coinbase transact solely with Coinbase itself.” According to the ruling, this accusation leads to the conclusion that the U.S.-based crypto exchange was a seller.
In a statement to Reuters, Coinbase reiterated that it “does not list, offer, or sell securities.” The exchange plans to fight to dismiss other claims in the case.
The latest development comes more than nine months after a court decision in April 2024 revived aspects of the case that had previously been dismissed by Judge Engelmayer. While the judge had quashed the lawsuit in February 2023, an order from the 2nd U.S. Circuit Court of Appeals in Manhattan in April 2024 allowed certain accusations to stand.
Judge Engelmayer’s ruling on February 7, 2025, nearly two years after the original verdict, permits the parts of the case that the appellate court decided should proceed.
In May 2024, a group of Coinbase customers from California and Florida filed a new lawsuit against Coinbase and its CEO Brian Armstrong alleging that the exchange’s crypto sales violated securities laws.
The lawsuit identified several tokens, including Solana, Polygon, Near Protocol, Decentraland, and Algorand, as securities. Coinbase, however, maintains that it does not list or sell securities and that secondary crypto sales do not meet the criteria to be classified as such.
Aside from class action lawsuits, Coinbase continues to battle a separate lawsuit filed by the U.S. Securities and Exchange Commission. The SEC sued Coinbase in June 2023, alleging that the company operated as an unregistered securities exchange.
