At the same time that Coinbase is being sued multiple times, it is also under increased scrutiny from government regulators. Currently, the San Francisco-based cryptocurrency exchange is being investigated by the U.S. Securities and Exchange Commission (SEC). At the same time, the law firms have filed two extra-judicial suits against Coinbase.
Further Regulatory Trouble for Coinbase
On Thursday, New York-based law firm Bragar Eagel & Squire announced plans to file suit against the cryptocurrency exchange for making false claims about its business practices. Pomerantz LLP has filed a second lawsuit against Coinbase, alleging that the exchange broke federal securities laws and should pay damages to those who lost money as a result. The purpose of each lawsuit is to award damages to the aggrieved parties.
Both complaints allege that defendants made false and misleading statements about defendants’ business, compliance efforts, and operations between April 14 and July 26 of this year. It has been alleged in the complaints that the cryptocurrency exchange hid the fact that it held customers’ cryptocurrency in escrow in anticipation of bankruptcy proceedings in which the customers would be treated as unsecured creditors.
Coinbase’s Good Name Is Being Threatened By An Increasing Number Of Cases
It has also been reported that the exchange denied disclosing that it had allowed users located in the United States to engage in digital asset trading despite the fact that doing so necessitated registration with the relevant securities regulator in order to offer securities. The lawsuits claimed that Coinbase’s public statements were misleading.
Coinbase has recently faced a number of similar legal challenges. These two separate lawsuits have surfaced at the same time that the United States’ securities regulator is keeping a close eye on the cryptocurrency exchange and possibly opening an investigation into allegations that it facilitates the trading of unregistered securities.
Meanwhile, in a separate case, former Coinbase global product manager Ishan Wahi stands accused of insider trading. The individual was previously this month found guilty of wire-fraud conspiracy.