Coinbase secures a significant legal victory as the U.S. Court of Appeals for the Second Circuit rules in its favor, affirming that secondary crypto sales on its platform do not violate securities laws. In other words, the entity affirms that Coinbase’s crypto sales are not securities.
Read CRYPTONEWSLAND onThe court’s decision impacts users who traded tokens on Coinbase from Oct 8, 2019, to March 11, 2022, highlighting the ongoing debate on whether cryptocurrencies qualify as securities. Specifically, this is another huge win for the crypto community similar to XRP being confirmed as not a security.
Plaintiffs filed federal and state law claims, alleging Coinbase’s actions constituted unregistered security offerings. However, Coinbase argued against the applicability of securities laws, leading to a detailed examination by the Court of Appeals.
The court upheld Coinbase’s potential liability under Section 12(a)(1) of the Securities Act while dismissing claims under the Securities Exchange Act due to insufficient evidence. Crucially, the interpretation of Coinbase’s evolving user agreements played a pivotal role, with discrepancies complicating resolution.
Plaintiffs view the ruling as progress in holding crypto platforms accountable under securities laws, advocating for investor protection. Conversely, Coinbase maintains that secondary crypto sales do not constitute securities transactions, stressing the importance of regulatory clarity for industry innovation.
Coinbase’s CLO, Paul Grewal, expressed gratitude for the court’s decision, highlighting the significance of contracts in determining liability under federal securities law.
This ruling carries substantial implications for cryptocurrency regulation, underscoring the ongoing debate over the legal classification of digital assets and the need for regulatory clarity in the evolving crypto landscape.
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