Coinbase Wins Major Victory Over Customer Lawsuit on Unregistered Token Sales

Coinbase has won a significant victory in a lawsuit filed by customers who claimed the cryptocurrency exchange was selling unregistered securities. U.S. District Judge Paul Engelmayer dismissed most of the claims, ruling that Coinbase is not considered a statutory seller for 'matched' transactions, which accounted for an estimated 99.97% of trading volume.

The judge found that in these transactions, Coinbase did not pass ownership of tokens to buyers and did not induce or solicit the trades. However, Engelmayer did allow customers to pursue claims over 'inventory' transactions, where Coinbase filled orders from tokens it owned, making up the remaining 0.03% of trading volume.

The lawsuit, which began in 2021, also relates to a previous case brought by the U.S. Securities and Exchange Commission (SEC) against Coinbase, which was dropped last year. The Digital Chamber, a cryptocurrency trade group, supported Coinbase's position, warning that an expansive definition of statutory seller could stifle innovation and drive trading volume to non-U.S. exchanges.

Coinbase Chief Legal Officer Paul Grewal posted on X, saying the company would 'vigorously defend' the remaining 0.03% of claims.