A New Jersey court judge has ruled that Coinbase’s lawsuit is admissible because of its depiction of pressure on regulators.
U.S. District Judge Brian Martinotti ruled on the evening of September 5 that Coinbase shareholders have the right to sue the cryptocurrency exchange for misleading information in a civil lawsuit initiated by the Securities and Exchange Commission.
The class action lawsuit, led by Swedish pension fund Sjunde AP-Fonden, alleges that Coinbase, its CEO Brian Armstrong, and other company executives failed to fairly represent the possibility of an enforcement action by the SEC.
Judge Martinotti also ruled that shareholders have the right to review a company’s risk disclosures in the event of a bankruptcy filing.
The decision came shortly before Coinbase stock posted an eight-day losing streak, with one crypto.news market analyst noting that COIN shares were forming a “risky pattern” amid poor crypto price performance.
Coinbase grapples with legal conundrums
Martinotti’s refusal to grant Coinbase’s motion to dismiss marked another partial loss for the firm in its ongoing battle with the SEC. In March, a federal judge in New York rejected the firm’s objection to dismissing a civil lawsuit filed by the SEC in June 2023.
But the firm has also made progress in court. According to Coinbase CLO Paul Grewal, Judge Katherine Polk Failla ordered the SEC to share information needed for the exchange’s defense. A court also rejected the SEC’s claim that Coinbase Wallet was an unregistered brokerage firm.
Today, Judge Failla ruled from the bench on our motion to compel @SECGov to provide essential information for the defense of our case. In short, the Court ordered the SEC to produce significant discovery. I will share the full text when it becomes available so you can read it for yourself. In…
— paulgrewal.eth (@iampaulgrewal) September 5, 2024
Meanwhile, the company has been active in lobbying throughout the US elections, either by making direct donations to super PACs like Fairshake or facilitating cryptocurrency fundraisers for candidates. Grewal also told Bloomberg that a pro-crypto Congress is almost certain regardless of the outcome of the November presidential election.