TechFlow reported on September 10, according to Coindesk, that Brian Martinotti, a U.S. District Judge for the District of New Jersey, issued a ruling in the shareholder class-action lawsuit against Coinbase, partially denying Coinbase's motion to dismiss the case. The lawsuit, dating back to 2022, alleges that Coinbase misled shareholders regarding its disclosure of regulatory risks.
The judge determined that the plaintiffs have made plausible allegations concerning Coinbase's statements about the likelihood of enforcement actions by the U.S. Securities and Exchange Commission (SEC). In his ruling, Judge Martinotti stated: "Plaintiffs have adequately alleged that defendants misleadingly described the low probability of SEC enforcement litigation, repeatedly emphasizing that the crypto assets listed on its platform do not constitute securities." The SEC sued Coinbase in June 2023 for violating federal securities laws, a case which remains ongoing. In that litigation, the judge similarly dismissed most of Coinbase’s motions to dismiss, indicating that the SEC's claims have sufficient legal basis to proceed to further proceedings.
Although the court upheld certain shareholder claims regarding disclosures of regulatory risk, it dismissed the majority of the other allegations in the suit. A Coinbase spokesperson responded: "The court agreed to dismiss most of the plaintiffs’ claims. The limited remaining claims are permitted to proceed largely due to the procedural posture of a motion to dismiss. We are confident in our position under both facts and law, and look forward to proving this in subsequent litigation."
