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A US court quashed a planned class action lawsuit filed by a Coinbase customer. Clients accuse the crypto platform of offering unregistered securities and not registering as a broker.
US District Judge Paul Engelmayer in Manhattan said that clients transacting on trading platforms Coinbase and Coinbase Pro could not establish that the companies sold or held ownership of the 79 tokens, which are a kind of digital asset, that they exchanged.
Allegations against Coinbase
Customers say that unlike other platforms that connect buyers and sellers, Coinbase acts as a “middleman”, which makes them “true sellers” of tokens. They say the configuration allows Coinbase to earn transaction fees while circumventing disclosure regulations designed to protect investors in conventional securities.
Despite allegedly pushing tokens by explaining their “claimed value proposition” and taking part in free token “airdrops” to stimulate trading volume, the court ruled that Coinbase had no active role in the transaction.
Engelmayer said in his writing that these actions were in line with the marketing, product and service efforts the court had ruled were insufficient to classify the defendant as a seller. The courts dispose of claims made under federal securities laws with prejudice, meaning they can no longer be pursued. Consumer attorneys did not return our requests for comment.
This comes as customers of cryptocurrency exchange Binance also appealed a different court’s decision in Manhattan to dismiss a similar complaint in March.
Coinbase: The NFT drop has been paused, but the market is still going
On February 1, Coinbase NFT announced it would “pause” further NFT declines. However, the company emphasized that it would not completely close its market. According to a tweet by Coinbase NFT, the company will be “pausing Drops creators” in the NFT marketplace to “concentrate on other features and tools that artists have requested.”
It needs to be clarified why Coinbase NFT had to stop the rollout with creators in order to continue with the introduction of other services. This may be due to the need for more personnel, as Coinbase, along with many other cryptocurrency companies, has been steadily laying off workers over the past year. Just one month ago, Coinbase announced it would be eliminating the jobs of another 950 employees.
Coinbase explained that the Coinbase NFT team is reallocating resources to concentrate on the areas that have the most significant impact on our consumers so that decision is taken.
Coinbase NFTs have seen around $7.34 million in total exchanged volume since they were first introduced. To put that into context, marketplace competitor OpenSea recorded over $11.3 million worth of Ethereum NFT trading volume yesterday.
Twitter users haven’t stopped making jokes about the small number of people taking advantage of Coinbase’s NFT marketplace in reaction to the company’s statement that it will temporarily suspend creator drops. This joke has always been a source of criticism for the Coinbase platform.
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