In a riveting development, Coinbase, along with CEO Brian Armstrong, has been slapped with a new class-action lawsuit, accusing the prominent cryptocurrency exchange of deceiving investors and operating on an allegedly illegal business model. Filed in the Northern District of California, the lawsuit represents a group of plaintiffs from California and Florida, claiming Coinbase has breached state securities laws since its inception by selling digital assets like Solana, Polygon, and others which they claim are, in fact, securities.

The plaintiffs assert that Coinbase’s own user agreement labels it as a “Securities Broker,” implying that the digital assets offered are akin to investment contracts. They are demanding a full rescission of their investments, statutory damages, and are pushing for a jury trial to obtain injunctive relief. This case echoes another recent lawsuit where consumers alleged harm due to Coinbase’s operations.

In a bold counter, Coinbase disputes these claims, arguing that their crypto sales do not fall under typical securities transaction criteria and thus, securities regulations should not apply. This legal battle is separate from another high-profile case involving the U.S. Securities and Exchange Commission, which also questions the classification of tokens sold on Coinbase as securities.

Meanwhile, in a defiant move, Coinbase is fighting back with an interlocutory appeal following a judge’s decision to allow the SEC case to proceed, supported by an amicus brief from crypto lawyer John Deaton, who is currently campaigning against Senator Elizabeth Warren.

Despite these legal entanglements, Coinbase reported a robust first quarter in 2024, boasting $1.6 billion in revenue and $1.2 billion in net income, bolstered by an uptick in market performance and the introduction of spot Bitcoin exchange-traded funds, highlighting a $1 billion in adjusted EBITDA. This legal drama unfolds as Coinbase grapples with both courtroom battles and financial triumphs.