Whether or not the crypto traded on Coinbase might be considered securities was the focal point.
The Court of Appeals reversed some of the lower court’s rulings and upheld others.
A major win in an ongoing trial has been made by crypto exchange Coinbase. Confirming that Coinbase’s platform does not violate the Securities Exchange Act, the U.S. Court of Appeals for the Second Circuit ruled in favor of the exchange.
Many individuals throughout the country who used Coinbase to trade tokens between October 8, 2019, and March 11, 2022, will be impacted by the court’s ruling. Whether or not the crypto traded on Coinbase might be considered securities was the central question in the disagreement.
Major Relief for the Exchange
Sections 5, 15(a)(1), 20(a), and 29(b) of the Securities Exchange Act of 1934 were also invoked in the plaintiffs’ federal claims. This was in addition to Sections 12(a)(1), 15, and 5 of the Securities Act of 1933. Additionally, they brought claims pertaining to securities laws in New Jersey, Florida, and California on behalf of a national class of plaintiffs.
Claiming that Coinbase was engaging in the offering and sale of unregistered securities, the plaintiffs put their case forward. On top of that, they claimed it broke other securities regulations.
Nevertheless, Coinbase said that the sale of secondary crypto assets did not comply with the requirements for securities transactions. Therefore challenging the applicability of securities laws. After reviewing all of the evidence, the Court of Appeals reversed some of the lower court’s rulings and upheld others.
In deciding whether Coinbase may be held liable for selling unregistered securities, the court looked at Section 12(a)(1) of the Securities Act. Nonetheless, it denied the plaintiffs’ requests for rescindment under Section 29 of the Securities Exchange Act due to a lack of evidence about the particular contracts involved in the transactions. The interpretation of Coinbase’s user agreements, which changed over time, was a major factor in the court’s judgment.
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