Coinbase faces new class-action lawsuit over 'fraudulent' business model

Coinbase is facing a new class-action lawsuit in which the plaintiffs claim that the exchange’s entire business model was built on lies.
The lawsuit, filed in the U.S. District Court for the District of California, alleges that Coinbase acknowledged in its user agreement that it was a securities broker. Therefore, the company has been willfully violating securities laws since its inception.
The plaintiffs in this case are Coinbase customers: Brett Maggard, Eduardo Cordi, Edwin Martinez, Gerardo Aceves, Thomas Fan, and Tiffany Smoot.
The lawsuit alleges that when the exchange filed for an initial public offering (IPO) in 2021, it disclosed the fact that it was offering securities without being legally registered.
The lawsuit also names a number of tokens offered by Coinbase that are considered securities, including Solana (SOL), Polygon (MATIC), Near Protocol (NEAR), Decentraland (MANA), Algorand (ALGO), Uniswap (UNI), Tezos (XTZ), and Stellar (XLM).
The plaintiffs now seek full rescission, statutory damages, and injunctive relief.
This latest lawsuit is similar to a previous one filed by a Coinbase customer, accusing the exchange of selling unregistered securities.
In the lawsuit, the judge ruled that secondary sales of cryptocurrencies on the exchange did not violate the Securities Exchange Act, a major victory for Coinbase.
Despite these legal battles, Coinbase continues to post strong financial results. In the first quarter of 2024, the exchange reported total revenue of $1.6 billion and net income of $1.2 billion.
Coinbase Outperforms in Q1 2024
– Revenue: $1.6 billion (up $72% from the previous quarter)
– Operating expenses: $900 million (up 5% from the previous quarter)
– Net income: $1.2 billion (up $331% from the previous quarter)
– Adjusted EBITDA: $1 billion (up $213% from the previous quarter)
– Cash: $7.1 billion (up $24% from the previous quarter)
- USDC on the platform has doubled compared to the previous quarter
– The number of basic developers increased 8 times compared to the previous quarter
Image credit: Ryan Rasmussen (@RasterlyRock)
May 2, 2024
Revenue from client trading increased by 99% from the previous quarter to $935 million, while revenue from institutional trading also increased by 133% from the previous quarter to $85 million.
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