Coinbase, the largest U.S. cryptocurrency exchange, must face a lawsuit from customers who allege the exchange illegally sold securities without the required broker-dealer registration. U.S. District Judge Paul Engelmayer rejected Coinbase's argument that it did not qualify as a "statutory seller" under federal securities law. The lawsuit alleges that Coinbase acted as a direct seller of 79 tokens traded on its platform, even though it did not pass title to the tokens. The judge's decision necessitates the conclusion that Coinbase was a seller because "customers on Coinbase transact solely with Coinbase itself". Judge Engelmayer also refused to dismiss claims under California, Florida, and New Jersey laws, stating that customers adequately alleged that Coinbase was a direct seller of the tokens. Coinbase maintains that it does not list, offer, or sell securities on its exchange and plans to fight to dismiss the remaining claims in the case.

The ruling comes after a prior dismissal of the class-action lawsuit in February 2023, which was later revived in part by the 2nd U.S. Circuit Court of Appeals in Manhattan in April 2024. Judge Engelmayer's February 7, 2025, decision allows the parts of the case that the appellate court decided should proceed to move forward. In May 2024, a new lawsuit was filed against Coinbase and its CEO Brian Armstrong by a group of Coinbase customers from California and Florida, also alleging that the exchange’s crypto sales violated securities laws. This lawsuit identified several tokens, including Solana, Polygon, Near Protocol, Decentraland, and Algorand, as securities.

In addition to the customer lawsuit, Coinbase is also engaged in a legal battle with the U.S. Securities and Exchange Commission (SEC). The SEC sued Coinbase in June 2023, alleging that the company operated as an unregistered securities exchange. Coinbase has countered that trades facilitated on its platform should be classified as asset sales of digital assets rather than securities trades. In January 2025, Coinbase asked a U.S. appeals court to rule that cryptocurrency trades are not securities1. Furthermore, Coinbase has also sued the SEC and Federal Deposit Insurance Corporation for allegedly attempting to "cut off digital-asset firms from essential banking services".

Coinbase has voluntarily sought and subjected itself to U.S. government regulation, engaging with more than 50 federal and state authorities. It holds a BitLicense and a money transmitter license from the New York Department of Financial Services (DFS) since 2017, making its asset listing process overseen by DFS and subject to DFS approval. Coinbase is also regulated by the Financial Crimes Enforcement Network (FinCEN) as a registered Money Services Business (MSB), subjecting it to anti-money laundering, transaction reporting, and recordkeeping requirements. Over 70% of the daily trading volume on Coinbase’s spot exchange is in tokens the CFTC has publicly stated are commodities.