Coinbase Escapes Most of Customer Lawsuit Over Unregistered Token Sales

A federal judge in New York has largely dismissed a lawsuit against Coinbase, the largest U.S. cryptocurrency exchange, over allegations that it illegally sold unregistered securities to customers.

The lawsuit claimed that around 60 tokens, including XRP and dogecoin, were sold as securities without proper registration, resulting in hundreds of billions of dollars in trading volume.

U.S. District Judge Paul Engelmayer ruled that Coinbase was not a statutory seller for 'matched' transactions, which accounted for an estimated 99.97% of trading volume, because it did not pass ownership of tokens to buyers and merely provided basic information on the tokens.

However, the judge found that Coinbase was a statutory seller for 'inventory' transactions, where it filled orders from its own token holdings, which accounted for around 0.03% of trading volume, totaling at least $178 million in sales.