Summary
TLDR: US appeals court partially reversed a decision to toss a 2021 customer lawsuit against Coinbase for trading unregistered securities, stating that Coinbase was not the actual seller. The court ruled that customers are not entitled to rescind transactions as they failed to identify a contract capable of rescission. The question of whether physical contracts are needed for an asset to be deemed a security has been a point of contention in legal battles between crypto exchanges and the SEC. Coinbase Chief Legal Officer Paul Grewal welcomed the decision, emphasizing the importance of contracts in federal securities law. The case has been sent back to the district court for further ruling.
Key Points
1. A US appeals court partially reversed a decision to toss a 2021 customer lawsuit against Coinbase for allegedly facilitating trading of unregistered securities.
2. Even though customers alleged Coinbase “promoted” the tokens, participating in marketing efforts are not enough to qualify the exchange as the seller.
3. The appeals court upheld the ruling that plaintiffs are not entitled to rescind transactions, as they did not provide sufficient evidence of a contract that allowed for transactions to be canceled.