Judge Rejects Coinbase's Attempt to Dismiss Shareholder Lawsuit Accusing It of Downplaying SEC Lawsuit Risk

The lawsuit accuses the largest US crypto exchange of downplaying the likelihood of being sued by the US Securities and Exchange Commission (SEC).

The price of Coinbase stock (NASDAQ:COIN) fell Monday on news that the United States Securities and Exchange Commission (SEC) filed a draft complaint highlighting the possibility of the exchange giant misappropriating assets belonging to its cryptocurrency customers.

The SEC warned that Coinbase could embezzle its customers' crypto assets, according to the document seen by CoinDesk. The agency also warned that customers could lose their funds in the event of bankruptcy.

Coinbase had previously argued that its customers' funds would be safe in case of bankruptcy. However, the exchange acknowledged that its clients' crypto assets could be misappropriated in the event of bankruptcy.

Coinbase shares fell 4% in morning trading at $140.05 in reaction to the news.

The SEC draft complaint warning about the possibility of Coinbase misappropriating the crypto assets of its customers was dropped on Monday with news that the agency had filed a draft complaint highlighting the possibility of the exchange giant misappropriating assets belonging to its cryptocurrency customers.

The SEC warned that Coinbase could embezzle its customers' crypto assets, according to the document seen by CoinDesk. The agency also warned that customers could lose their funds in the event of bankruptcy.

Coinbase had previously argued that its customers' funds would be safe in case of bankruptcy. However, the exchange acknowledged that its clients' crypto assets could be misappropriated in the event of bankruptcy.

Coinbase shares fell 4% in morning trading at $140.05 in reaction to the news.

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