The Securities and Exchange Commission scored a major win in its lawsuit against Coinbase on Wednesday, as a judge ruled that its claim that the cryptocurrency exchange engaged in unregistered sales of securities could be heard by a jury at trial.
Coinbase shares fell around 2% on news of the ruling in Manhattan federal court rejecting its bid to dismiss the SEC's complaint.
The regulator first filed suit against Coinbase in June, alleging the company was acting as an unregistered broker and exchange.
"The Court finds that the SEC adequately alleges that Coinbase, through its Staking Program, engaged in the unregistered offer and sale of securities," Failla wrote.
In June, SEC Chair Gary Gensler said that trading platforms like Coinbase "call themselves exchanges" but were "commingling a number of functions."
Persons:
Coinbase, Katherine Polk Failla, Failla, Paul Grewal, Grewal, Gary Gensler, Gensler
Organizations:
The Securities, Exchange Commission, Coinbase, SEC, New York Stock Exchange, CNBC
Locations:
Manhattan, U.S