A judge in Manhattan federal court ruled Wednesday in favor of the Securities and Exchange Commission in its lawsuit against Coinbase, saying that the regulator’s allegation that the cryptocurrency exchange platform participated in unregistered sales of securities could be heard by a jury at trial.
“The Court finds that the SEC adequately alleges that Coinbase, through its Staking Program, engaged in the unregistered offer and sale of securities,” Failla wrote.
The SEC filed the lawsuit against Coinbase in June, asking for the company to be “permanently restrained” from acting as an unregistered broker and exchange. However, U.S. District Judge Katherine Polk Failla’s ruling also dismissed the SEC’s assertion that by making its Wallet application available to customers, Coinbase acted as an unregistered broker.
Upon news of the ruling, Coinbase’s shares fell approximately 2.5%. But, “we were prepared for this,” wrote Chief Legal Officer Paul Grewal on X, “and we look forward to uncovering more about the SEC’s internal views and discussions on crypto regulation.”
