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Coinbase faces new lawsuit

Coinbase crypto exchange and its CEO, Brian Armstrong, face a new class-action lawsuit alleging investors were deceived into buying securities and claims the company’s business model is illegal.

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Coinbase crypto exchange and its CEO, Brian Armstrong, face a new class-action lawsuit alleging investors were deceived into buying securities and claims the company’s business model is illegal.

The lawsuit filed in the United States District Court for the Northern District of California San Francisco Division, representing plaintiffs Gerardo Aceves, Thomas Fan, Edwin Martinez, Tiffany Smoot, Edouard Cordi and Brett Maggard from California and Florida, alleges that Coinbase’s digital asset sales knowingly violated state securities laws since the company’s inception.

The complainants claim Coinbase admitted it is a “Securities Broker” in its user agreement, making digital asset securities sold by the exchange as investment contracts or other securities. They also claim Coinbase Prime brokerage is a securities broker.

The plaintiffs seek full rescission, statutory damages under state law and injunctive relief through a jury trial. This lawsuit resembles another class-action suit alleging consumer harm from Coinbase’s sale of securities.

Coinbase has argued that secondary crypto asset sales didn’t meet securities transaction criteria and disputed the relevance of securities regulations.

This new lawsuit is distinct from Coinbase’s highly publicized legal battle with the U.S. Securities and Exchange Commission, which also questions whether tokens sold on Coinbase should be classified as securities. Coinbase has recently filed an interlocutory appeal in response to a judge’s decision allowing the case to proceed.

In an April 26 filing in the U.S. District Court for the Southern District of New York, John Deaton, the crypto lawyer currently running an election campaign to unseat Senator Elizabeth Warren, filed an amicus brief in support of a motion for interlocutory appeal on behalf of 4,701 Coinbase customers.

Coinbase reported a strong rebound in the first quarter of 2024, supported by an uptick in market performance and the launch of spot Bitcoin exchange-traded funds. The exchange posted $1.6 billion in total revenue and $1.2 billion in net income for the first quarter, achieving $1 billion in adjusted earnings before interest, taxes, depreciation and amortization.

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7-Eleven South Korea to accept CBDC payments in national pilot program

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7-Eleven is set to participate in the testing phase of a central bank digital currency (CBDC) initiative, running from April to June. The retail giant’s involvement highlights the growing push for digital currency integration in everyday transactions.

The pilot program will assess the feasibility of CBDC payments at 7-Eleven stores, allowing customers to make purchases using the digital currency. The initiative is part of a broader effort to explore the real-world application of CBDCs in retail environments, potentially shaping future payment systems.

As central banks worldwide accelerate their digital currency research, private sector collaboration is seen as crucial for widespread adoption. If successful, 7-Eleven’s participation could pave the way for broader CBDC usage across retail and commercial sectors.

The outcome of the testing phase will provide valuable insights into consumer adoption, transaction efficiency, and potential regulatory considerations, influencing how CBDCs are integrated into mainstream financial systems.

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SEC and Gemini ask to pause lawsuit to explore ‘potential resolution’

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The U.S. Securities and Exchange Commission (SEC) and crypto exchange Gemini have agreed to pause legal proceedings as both sides explore a potential resolution to their ongoing lawsuit. The move signals a possible settlement in the high-profile case, which centers around Gemini’s now-defunct Earn program.

The SEC initially sued Gemini, alleging that the Earn program—designed to offer users yield on crypto deposits—operated as an unregistered securities offering. Gemini has pushed back against the claims, arguing that its operations complied with regulatory standards.

By pausing litigation, both parties may be looking for a compromise that could set a precedent for crypto lending products in the U.S. A settlement could also provide regulatory clarity for similar platforms navigating SEC scrutiny.

While the outcome remains uncertain, the crypto industry is closely watching the case, as its resolution could impact future enforcement actions and the broader regulatory approach toward digital asset lending services.

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GameStop finishes $1.5B raise to add Bitcoin to its balance sheet

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GameStop has successfully completed a debt offering, raising capital that may be used to acquire Bitcoin, signaling the company’s deeper foray into digital assets. The move aligns with its broader strategy to diversify beyond traditional retail operations and into emerging financial technologies.

While GameStop has not confirmed the exact allocation of the funds, market speculation suggests that a portion could be used to buy Bitcoin, following in the footsteps of companies like MicroStrategy. The potential investment would reinforce GameStop’s ongoing pivot toward blockchain and digital assets, an effort that began with its NFT marketplace and crypto-related initiatives.

Analysts see this development as part of a growing trend of corporations exploring Bitcoin as a reserve asset amid concerns over inflation and monetary policy. If GameStop proceeds with the acquisition, it could further validate Bitcoin’s role as a strategic investment for publicly traded companies.

The company’s board will ultimately decide how the newly raised capital is deployed. Investors and the broader crypto market are watching closely for any official announcements regarding GameStop’s Bitcoin strategy.

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