A federal judge in New Jersey has allowed a case against Coinbase to go forward. The lawsuit says that the Cryptocurrency Exchange lied to its shareholders about how likely it was that the Securities and Exchange Commission (SEC) would crack down on the cryptocurrency exchange.
Judge Brian Martinotti said that Coinbase owners, led by the Swedish pension fund Sjunde AP-Fonden, can sue the company because it failed to inform them enough about the possibility of SEC action.
SEC Battle Intensifies For Coinbase
In the lawsuit, it is said that the Exchange, its CEO Brian Armstrong, and other officials played down the chance of this happening. Judge Martinotti also said that owners could question what the company said about the risks of going bankrupt.
This decision comes after Coinbase’s stock, COIN, has been going down for eight days, in part because the prices of cryptocurrencies have been falling. The Exchange is still in court battle with the SEC, and this ruling is another setback for them.
A federal judge in New York turned down Coinbase’s request earlier this year to throw out a civil suit that the SEC had filed in June 2023.
Even with these problems, the Exchange has had some court wins. The SEC was told by Judge Katherine Polk Failla to give the Exchange’s important information for its defense. A judge also said that Coinbase Wallet is not an unregistered broker-dealer, which is what the SEC had said before.
Coinbase is still involved in U.S. politics by giving funds to super PACs like Fairshake and running fundraising campaigns for crypto-friendly politicians. Chief Legal Officer Paul Grewal recently told Bloomberg that a Congress that supports crypto is likely to happen no matter who wins the election in November.
