A federal judge has granted Coinbase (COIN) shareholders the opportunity to move forward with a narrowed lawsuit against the US-based cryptocurrency exchange, alleging that the company concealed alleged “business risks,” including the possibility of being sued by the Securities and Exchange Commission (SEC).
The shareholders contend that the company misrepresented the likelihood of an SEC lawsuit regarding its operations as an unregistered securities exchange, leading them to believe that such an action was improbable.
Martinotti emphasized that claims grounded in particularized allegations must be allowed to proceed, stating, “Where plaintiffs have appropriately provided defendant-by-defendant particularity, the claims must remain.”
The ruling, which spans 59 pages, does not outline which specific statements were dismissed due to the group pleading issue, as neither party identified those in their arguments.
The proposed class action suit is spearheaded by the Swedish pension fund Sjunde AP-Fonden and encompasses Coinbase shareholders from April 14, 2021, to June 5, 2023.
In February, the Securities and Exchange Commission had concluded its lawsuit against the exchange as regulatory scrutiny on the cryptocurrency industry began to ease under the Trump administration.
At the time of writing, neither Coinbase nor its shareholders’ legal representatives have commented on the judge’s ruling. It remains to be seen what actions the firm will take and whether its executives will issue an official comment.
Despite the judge’s decision, the exchange’s stock, which trades on the Nasdaq under the ticker symbol COIN, surged towards $347 on Wednesday, marking gains of almost 12%. This aligns with the broader crypto market recovery, led by Bitcoin (BTC), which is approaching record highs.
Featured image from DALL-E, chart from TradingView.com
