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Top Cryptocurrency News: Plaintiff in Coinbase Lawsuit Expresses Concerns about Account Lockouts and Crypto as a Security

24-Aug-2022 By: Shailja Joshi
Top Cryptocurrency N

One user has filed a class-action lawsuit against cryptocurrency exchange Coinbase on behalf of account and wallet holders who have had their accounts compromised and suffered losses as a result of illegal asset transfers.

Plaintiff George Kattula requested a jury trial against Coinbase in an August 15 filing in the United States District Court for the Northern District of Georgia, alleging the crypto exchange did not employ methods targeted at keeping customers' accounts secure and had unfairly and arbitrarily blocked clients out of their accounts during periods of peak volatility in the crypto market.

Furthermore, Kattula said that Coinbase should be licensed in the United States as a broker or dealer since the platform manages the transfer of securities — in this case, cryptocurrencies.

As per the lawsuit, “Coinbase fails to disclose that the crypto assets on its platform are securities.” Indeed, Coinbase defies federal and state regulations by declaring that it does not require a registration certificate for such securities and refusing to register as a securities exchange or broker-dealer.

The filing added that “crypto assets, like traditional securities, represent an investment in a project that will be carried out using revenues received through the sale of the cryptocurrencies. Investors buy cryptocurrency in the belief that its value would rise as the issuer develops some use for it.”

Coinbase has gone offline several times during moments of significant volatility in the cryptocurrency market, prompting some users to pursue legal action. In March 2022, a class-action lawsuit filed in the Southern District Court of New York alleged the crypto exchange was also operating as an unregistered securities exchange, classifying 79 different cryptocurrencies as securities subject to the SEC's regulatory oversight.

SEC head Gary Gensler has stated several times that most token offers fall within the agency's regulatory authority as securities and must be registered as such. In July, the SEC issued charges against a former Coinbase product manager, his brother, and an accomplice for insider trading, alleging that at least nine of the 25 cryptocurrencies the trio allegedly utilized were securities.

In an interview with a media outlet released on Tuesday, former Consumer Financial Protection Bureau director Kathy Kraninger stated that case law may ultimately determine whether or not there is regulatory certainty in the cryptocurrency industry. In a Friday filing, the legal team of a former OpenSea employee also accused of insider trading claimed that prosecutors only filed charges to establish a legal precedent that nonfungible tokens were securities.

In the crypto-community, there has long been confusion about cryptocurrency as security; several prominent leaders and governments have shared their opinions on the issue, but there is still much more debate to come on this subject. So, what are your thoughts on cryptocurrencies as security?

Read also: Bitcoin is "Not Mature Enough to Function as an Inflation Hedge" - Scaramucci.

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