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Coinbase wins dismissal of most customer lawsuit over token sales
A judge said the claims failed for “matched” trades that made up about 99.97% of trading volume, while allowing potential claims tied to “inventory” sales of at least $178 million.
Coinbase won the dismissal of most claims in a proposed customer class action accusing the largest U.S. cryptocurrency exchange of illegally selling tokens classified as unregistered securities, according to Reuters. The case centered on more than 60 tokens, including XRP and dogecoin, and sought unspecified damages.
U.S. District Judge Paul Engelmayer in Manhattan dismissed all claims tied to “matched” transactions, where Coinbase pairs customers’ buy and sell orders. The matched trades accounted for an estimated 99.97% of trading volume, equal to hundreds of billions of dollars, and the judge found Coinbase was not a statutory seller because it did not pass token ownership to buyers.
Engelmayer said customers may still pursue claims related to “inventory” transactions, where Coinbase fills orders from tokens it owns. Inventory transactions made up the remaining 0.03% of volume and included at least $178 million in sales, and the judge said Coinbase was a statutory seller for those trades because it passed title and acted as a dealer and underwriter.
The lawsuit began in 2021, and Engelmayer previously dismissed other federal securities law claims in 2023. Reuters also noted that the U.S. Securities and Exchange Commission ended a separate lawsuit against Coinbase last year that had alleged the exchange allowed trading in tokens that should have been registered as securities.
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