Hey there! Here’s a story about something important happening with a big company called Coinbase, where people buy and sell digital money called cryptocurrency. A group of people who own a part of this company, called shareholders, are upset and took Coinbase to court. A court in the United States said Coinbase has to keep dealing with this big group lawsuit.

Can Coinbase Overcome Legal Obstacles?

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• A U.S. judge partly rejected Coinbase’s attempt to dismiss a lawsuit claiming the company misled investors about regulatory risks.
• The lawsuit, which started in 2022, alleges Coinbase falsely downplayed the chance of SEC enforcement. The SEC later sued Coinbase in June 2023.
• Some claims were dismissed, but the court allowed key allegations about misleading statements on SEC action to continue.

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The shareholders started this lawsuit because they believe Coinbase didn’t tell the truth about something very important. They think Coinbase didn’t warn them enough about getting in trouble with a group called the U.S. Securities and Exchange Commission, or SEC for short. The SEC is like a team of referees for grown-ups that makes sure companies follow the rules.

A judge named Brian Martinotti, who works in New Jersey, looked at the situation. He said the shareholders’ complaint might have a point because Coinbase didn’t say the SEC might take action against them. This became even more important when the SEC actually sued Coinbase in June 2023, saying they didn’t follow the rules about trading.

Even though the judge agreed with some of what the shareholders said, he didn’t agree with everything. He said most of what they were complaining about wasn’t true, except for the part about Coinbase not telling the truth about the SEC possibly taking action.

This lawsuit started back in 2021 when the shareholders began buying pieces of Coinbase. They changed some parts of their complaint in July 2023. Even though Coinbase tried to stop the lawsuit in December 2023, the judge said some parts could stay, and some parts couldn’t. He said they couldn’t argue about Coinbase saying nice things about their business, but they could keep talking about the SEC stuff.

Someone from Coinbase said they were happy that many parts of the lawsuit were dismissed. But they also said they’re ready to talk about the parts that are still there because they believe they’re doing the right thing.

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