Paul Engelmayer, District Judge for the Southern District of New York, said that Coinbase sells digital assets that qualify as securities without registering with the U.S. Securities and Exchange Commission (SEC). This statement was made in a court ruling issued on February 7.
"The Court, substantially constrained by the Second Circuit's decision at the pleadings stage, denies Coinbase's motion," said Engelmayer. "Its gravamen is that Coinbase lists and sells digital assets qualifying as 'securities' without registering with the U.S. Securities and Exchange Commission ('SEC') as a securities exchange or broker-dealer. The Court therefore, as explained below, instructs the parties to develop a case management plan entailing bifurcated discovery that is aimed at front-loading resolution of that issue via early summary judgment motion(s)."
According to court documents, the case Underwood v. Coinbase Global, Inc., filed in the U.S. District Court for the Southern District of New York, involves allegations that Coinbase listed and sold unregistered securities without registering as a securities exchange or broker-dealer with the SEC. The lawsuit covers 79 digital assets traded on Coinbase's platforms between October 8, 2019, and March 11, 2022. Engelmayer previously dismissed the case in 2023, but the Second Circuit reinsaid key claims under the Securities Act of 1933 and state law in 2024, leading to the February 7, 2025 ruling. The court has now ordered bifurcated discovery to resolve whether Coinbase qualifies as a "statutory seller" under federal securities law.
Swan Bitcoin reports that Coinbase has experienced recurring issues with customer support and technical reliability. Users have reported long wait times, difficulty accessing support, and delays in resolving account-related matters. Some customers have faced account lockouts and transaction delays during periods of high market activity. In February 2024, a technical glitch caused many users to see a zero balance in their accounts, preventing access to funds until resolved. Additionally, system outages during high trading volumes have temporarily restricted users from making trades.
Judge Engelmayer has served on the U.S. District Court for the Southern District of New York since 2011 after being nominated by President Barack Obama and confirmed by the Senate. He previously worked as an Assistant U.S. Attorney in New York and later served as Chief of the Major Crimes Unit. Before his judicial appointment, he was a partner at WilmerHale specializing in securities litigation and criminal defense.
According to their website, Coinbase Global, Inc., is a publicly traded cryptocurrency exchange platform founded in 2012 by Brian Armstrong and Fred Ehrsam. Headquartered in San Francisco, California, it offers an online platform for buying, selling, transferring, and storing cryptocurrency.
