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Southern District Of New York Denies Digital Asset Trading Company’s Motion For Judgment On The Pleadings
03/11/2025
On February 7, 2025, Judge Paul A. Engelmayer of the United States District Court for the Southern District of New York denied a motion for judgment on the pleadings in a putative class action against a cryptocurrency exchange company (the “Company”), its parent, and the parent’s CEO for alleged violations of Sections 12 and 15 of the Securities Act of 1933 (the “Securities Act”), Section 29(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), and securities laws of California, Florida, and New Jersey. Underwood v. Coinbase Glob., Inc., No. 21 Civ. 8353 (PAE) (S.D.N.Y. Feb. 7, 2025).
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Southern District Of New York Dismisses Claims Against Cryptocurrency Platform Seeking To Hold It Liable Under The Securities Laws For Alleged Fraudulent Transactions On Its Platform
09/06/2023
On August 29, 2023, Judge Katherine Polk Failla of the United States District Court for the Southern District of New York dismissed with prejudice a putative class action against a decentralized cryptocurrency trading platform and certain of its investors under Section 12(a)(1) of the Securities Act and Section 29(b) of the Securities Exchange Act. Risley v. Universal Navigation Inc., 2023 WL 5609200 (S.D.N.Y. Aug. 29, 2023). Plaintiffs alleged that they purchased fraudulent cryptocurrency tokens on the exchange. The Court held, assuming but not deciding that the tokens were securities, that plaintiffs failed to state a claim for rescission.
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Southern District Of New York Dismisses Putative Class Action Against Cryptocurrency Exchange For Failure To Adequately Allege “Statutory Seller” Status Or Prohibited Contracts
02/14/2023
On February 1, 2023, Judge Paul A. Engelmayer of the United States District Court for the Southern District of New York dismissed a putative class action against a cryptocurrency exchange company, its parent, and the parent’s CEO, asserting claims under Section 12(a)(1) of the Securities Act of 1933, Section 29(b) of the Securities Exchange Act of 1934, and certain California, Florida, and New Jersey statutes. Underwood v. Coinbase Global, Inc.,—F. Supp. 3d—, 2023 WL 1431965 (S.D.N.Y. 2023). Plaintiffs alleged that the company sold or solicited securities, and entered into contracts to buy and sell securities, without registering as an exchange or broker-dealer. The Court held that, even if cryptocurrencies were deemed securities, plaintiffs failed to adequately allege that the company itself sold or solicited cryptocurrency tokens to or from exchange participants, or that any contract with the company required plaintiffs to purchase or sell prohibited securities.