A New Jersey court judge has ruled a lawsuit against Coinbase regarding its portrayal of a potential regulatory crackdown as acceptable.

On September 5, U.S. District Judge Brian Martinotti decided that Coinbase shareholders could sue the crypto exchange for its misleading stance on the Securities and Exchange Commission’s (SEC) civil complaint. This class action lawsuit, led by the Swedish pension fund Sjunde AP-Fonden, claimed that Coinbase, its CEO Brian Armstrong, and other executives did not accurately represent the likelihood of SEC enforcement action.

Judge Martinotti also determined that shareholders could examine the firm’s risk disclosures in the event of a bankruptcy filing. This ruling came shortly before Coinbase stock experienced an eight-day loss streak. A market analyst pointed out that COIN shares formed a “risky pattern” amid weak crypto price performance.

Judge Martinotti’s decision to dismiss Coinbase’s motion marked another partial loss in the firm’s ongoing legal battles with the SEC. Earlier in March, a federal judge in New York rejected Coinbase’s appeal to dismiss an SEC civil lawsuit from June 2023.

Despite these challenges, Coinbase has also made some progress in court. According to Coinbase Chief Legal Officer Paul Grewal, Judge Katherine Polk Failla ordered the SEC to share information necessary for the exchange’s defense. Additionally, a court rejected the SEC’s claim that Coinbase Wallet was an unregistered broker-dealer.

Today Judge Failla ruled from the bench on our motion to compel the SEC to provide key information for the defense of our case. In short, the Court ordered the SEC to produce important discovery. I’ll share the full transcript when we have it, so you can read it for yourself.

Meanwhile, Coinbase has been active in lobbying efforts throughout the U.S. election season. The company has made direct donations to super PACs like Fairshake and facilitated crypto fundraisers for candidates. Grewal mentioned that a pro-crypto Congress seems likely, regardless of the outcome of the upcoming presidential elections.

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