• Investors from Florida and California have sued Coinbase for deceiving investors into buying unregistered securities and alleged that the exchange’s business model is illegal.
• The lawsuit singles out tokens such as Stellar’s XLM, Solana’s SOL, Algorand’s ALGO, Polygon’s MATIC and Uniswap’s UNI as securities.

Coinbase just can’t seem to leave its legal trials behind. The exchange is facing yet another lawsuit alleging that it facilitates the sale of securities without proper licensing, not for the first time.

The latest lawsuit was filed in the District Court for the Northern District of California in San Francisco. The six plaintiffs—all Coinbase users—describe the exchange as “part of a shadowy crypto ecosystem operating just outside of the law since formed over ten years ago.”

The lawsuit states in part:

Its entire business model has been built upon a lie and a dream: the lie is that “we do not sell securities,” and the dream is that, knowing it would eventually be caught in the lie, “it is better to ask for forgiveness than permission.”

Coinbase repeatedly and intentionally violated state securities laws since its founding, the plaintiffs say. They specifically point out that the exchange’s User Agreement admits to securities involvement, allegedly claiming that the crypto it lists falls under securities. Apparently, the exchange repeated the same rhetoric in its filing with the SEC to become a public company.

And yet, Coinbase has never registered itself, its people, or the crypto securities it sells.

Coinbase Lawsuit Claims XLM, SOL, MATIC Are Securities

The lawsuit specifically cites eight cryptocurrencies the plaintiffs allege are securities. They are Solana (SOL), Algorand (ALGO), Polygon (MATIC), Decentraland (MANA), Near Protocol (NEAR), Uniswap (UNI) Tezos (XTZ) and Stellar Lumens (XLM).

They make the same arguments for all the cryptos: that the investors expected the value of the crypto to rise, and they expected it to happen “solely from the efforts of [any of the eight tokens]’s creator, developer and issuer.”

It’s unclear why the plaintiffs chose these eight cryptos despite acknowledging that as of January this year, Coinbase listed 235 crypto tokens.

The lawsuit further attacks the Coinbase Earn Accounts, which it alleges are “a Digital Asset Security that was offered and sold on the Coinbase Digital Asset Platforms during the Class Period.”

The plaintiffs are from Florida and California and allege that the exchange breached state securities laws in both states. Coinbase allegedly operated as an unregistered broker-dealer and “engaged in deceptive acts and practices under California law by taking advantage of the lack of knowledge, ability, experience, or capacity of Plaintiffs to a grossly unfair degree.”

This isn’t the first time Coinbase has been accused of securities violation, as CNF has reported. In its most recent one, the exchange defended its business model, and last month, a judge ruled in its favour. However, in that case, it won the lawsuit because of its user agreement; the judge ruled that the class-action lawsuit failed to meet the criteria as many plaintiffs had different user agreements as Coinbase had been updating the language used over time.