A U.S. judge has ruled that Coinbase must face a class action lawsuit brought by customers in New York, marking a significant legal setback for the crypto exchange. The lawsuit alleges that Coinbase illegally sold securities and acted as a direct seller—a claim the exchange has strongly denied.

Judge Rejects Coinbase’s Defense

Court rules Coinbase transacted directly with customers
U.S. District Judge Paul Engelmayer ruled on February 7, 2025, that Coinbase’s argument—claiming it is not a statutory seller under U.S. federal securities law—does not hold. The judge emphasized that customers transact directly with Coinbase, reinforcing the plaintiffs’ claim that the exchange acted as a seller rather than a platform facilitating third-party transactions

Case Revived After Previous Dismissal

Lawsuit gains momentum despite past setbacks
This lawsuit is not new; it was initially dismissed by Judge Engelmayer in February 2023. However, in April 2024, the 2nd U.S. Circuit Court of Appeals in Manhattan reinstated parts of the case, allowing certain allegations to proceed. The latest ruling upholds those claims, ensuring that the class action lawsuit moves forward.

Coinbase’s Response to Allegations

Exchange denies selling unregistered securities
Coinbase has repeatedly denied the allegations, stating that it does not list, offer, or sell securities. The exchange has vowed to fight the lawsuit, aiming to dismiss additional claims. In a statement to Reuters, Coinbase reiterated its stance, asserting that secondary sales of cryptocurrencies do not constitute securities transactions under U.S. law.

Additional Legal Challenges for Coinbase

Battles continue on multiple fronts
Beyond this class action lawsuit, Coinbase is also facing a separate legal battle with the U.S. Securities and Exchange Commission (SEC). The SEC sued the exchange in June 2023, accusing it of operating as an unregistered securities exchange. Additionally, in May 2024, a new lawsuit was filed by customers from California and Florida, again alleging that Coinbase’s crypto sales violated securities laws.

The Road Ahead for Coinbase

Potential regulatory implications for the crypto industry
The outcome of this case could have far-reaching consequences for Coinbase and the broader crypto industry. If the courts ultimately rule against Coinbase, it could reshape regulatory oversight for crypto exchanges in the U.S., reinforcing the need for clearer legal frameworks regarding cryptocurrency transactions and securities laws.