Coinbase, the largest cryptocurrency exchange in the United States, is facing a federal class action lawsuit alleging it has operated as an unlicensed securities exchange since at least 2021, selling 79 digital tokens that plaintiffs say should have been registered as securities under federal law. The case, *Underwood v. Coinbase Global, Inc.* (No. 21-cv-08353), filed in the Southern District of New York, has survived multiple dismissal attempts and is now in the discovery phase — a significant milestone that signals the court believes the claims have enough substance to move forward.
For anyone who bought tokens like SOL, DOGE, ADA, SHIB, MATIC, XRP, DOT, LINK, UNI, or dozens of others through Coinbase, this litigation could eventually determine whether the exchange owes rescissory damages under federal and state securities laws. The lawsuit is being led by Silver Golub & Teitell LLP, and the plaintiffs’ core argument is straightforward: Coinbase acted as an unregistered broker, sold digital assets that function as securities, and failed to disclose the risks that come with that classification. Coinbase has denied all wrongdoing, maintaining that the tokens on its platform are not securities and that the lawsuits lack merit. No settlement has been reached as of early 2026, but the case’s progress through the courts — including a unanimous reversal by the Second Circuit Court of Appeals — has made it one of the most closely watched securities cases in the crypto industry.
Table of Contents
- What Is the Coinbase Securities Class Action and Why Does It Matter?
- How the Case Survived Dismissal — The Second Circuit’s Unanimous Reversal
- The SEC’s Enforcement Action Against Coinbase — Filed and Then Dropped
- Oregon’s Attorney General Sues Coinbase — States Fill the Enforcement Gap
- What Coinbase Users Should Know About the Discovery Phase
- The Broader Legal Question — Are Crypto Tokens Securities?
- What Comes Next for the Coinbase Class Action
- Frequently Asked Questions
What Is the Coinbase Securities Class Action and Why Does It Matter?
The Coinbase securities class action centers on a question that has defined crypto regulation for years: are the digital tokens traded on major exchanges actually securities? Under U.S. law, securities must be registered with the Securities and Exchange Commission, and entities selling them must comply with disclosure requirements designed to protect investors. Plaintiffs in *Underwood v. Coinbase* allege the exchange sidestepped these requirements entirely, listing and selling 79 tokens — including major names like Solana (SOL), Dogecoin (DOGE), Cardano (ADA), Shiba Inu (SHIB), Polygon (MATIC), and Ripple (XRP) — without registering them or itself as a broker-dealer. The practical consequence, according to the lawsuit, is that millions of retail investors purchased assets without the risk disclosures they were legally entitled to receive.
What makes this case particularly significant is the sheer breadth of tokens involved. This is not a lawsuit about one obscure altcoin. The 79 tokens at issue include some of the most widely held digital assets in existence, spanning decentralized finance protocols (AAVE, COMP, MKR, UNI), layer-1 blockchains (SOL, ADA, DOT, ALGO, ATOM), oracle networks (LINK), storage protocols (FIL), metaverse tokens (MANA), and meme coins (DOGE, SHIB). If the court rules that these tokens are securities, it would not only expose Coinbase to substantial damages — it could reshape the regulatory landscape for every crypto exchange operating in the United States. The plaintiffs are seeking rescissory damages, which in securities law means they want to be made whole — essentially returned to the financial position they were in before purchasing the tokens. This is a more aggressive remedy than simply seeking compensatory damages, because it shifts the burden to Coinbase to account for losses investors sustained on tokens the exchange allegedly should never have sold without proper registration.
How the Case Survived Dismissal — The Second Circuit’s Unanimous Reversal
The Coinbase class action nearly died in 2023 when a U.S. District Court dismissed the case, ruling that the plaintiffs had failed to demonstrate Coinbase was a “statutory seller” of the tokens under the Securities Act. The distinction matters: if Coinbase merely facilitated trades between buyers and sellers on its platform, it might avoid liability as a direct seller. The dismissal appeared to be a major win for Coinbase and for the broader crypto industry’s argument that exchanges are platforms, not securities dealers. However, in April 2024, the Second Circuit Court of Appeals unanimously reversed that dismissal. The three-judge panel found that claims under the U.S. Securities Act, as well as state securities laws in California, Florida, and New Jersey, could proceed.
The key finding was damaging for Coinbase: the court pointed to the exchange’s own contractual agreements, which indicated that customers buy tokens directly from Coinbase — not from third-party sellers on the platform. In other words, Coinbase’s own terms of service undermined its argument that it was merely a marketplace facilitator. This ruling did not determine whether the tokens are in fact securities, but it cleared the path for that question to be litigated on the merits. Then, in February 2025, Judge Paul Engelmayer of the Southern District of New York denied Coinbase’s motion for judgment on the pleadings — another attempt to end the case before trial. The judge ruled that Coinbase qualifies as a seller of the 79 tokens and pushed the case into discovery. It is worth noting a limitation here: surviving a motion to dismiss or a motion for judgment on the pleadings does not mean the plaintiffs will win. It means only that their claims are plausible enough to warrant further investigation. Discovery could reveal evidence that strengthens or weakens either side’s position, and Coinbase will have additional opportunities to seek summary judgment before any trial.
The SEC’s Enforcement Action Against Coinbase — Filed and Then Dropped
Running parallel to the class action was a separate and highly publicized enforcement case brought by the SEC itself. In June 2023, the SEC sued Coinbase directly, alleging the exchange had been operating as an unregistered exchange, broker, and clearing agency. The SEC’s case was broader in scope than the private class action and carried the weight of a federal regulatory agency behind it. For a time, it appeared Coinbase was facing a two-front legal war that could fundamentally threaten its business model. The SEC case took a dramatic turn. On February 21, 2025, the SEC dismissed its enforcement action against Coinbase with prejudice — meaning it cannot refile the same claims. Coinbase paid no fines, accepted no restrictions, and retained its existing business model.
The SEC cited its newly formed Crypto Task Force and signaled a shift in strategy: rather than pursuing enforcement actions against individual companies, the agency said it would focus on developing a comprehensive regulatory framework for digital assets. For Coinbase, this was an unqualified victory. CEO Brian Armstrong and the company publicly framed the dismissal as vindication of their long-held position that their operations were lawful. But the SEC’s withdrawal does not resolve the private class action. The *Underwood* case is brought by private plaintiffs, not by a government agency, and the legal standards differ. While the SEC’s decision to drop its case may bolster Coinbase’s public narrative, it does not establish any legal precedent that the 79 tokens are not securities. In fact, the enforcement vacuum left by the SEC’s retreat has prompted other actors to step in — most notably, state attorneys general who argue that someone needs to protect investors even if the federal government has chosen not to.
Oregon’s Attorney General Sues Coinbase — States Fill the Enforcement Gap
On April 18, 2025, Oregon Attorney General Dan Rayfield filed a separate state lawsuit against Coinbase, alleging the exchange sold 31 unregistered securities to Oregon residents. The tokens named in Oregon’s complaint include SOL, XRP, ADA, LINK, UNI, MATIC, NEAR, and AVAX — many of which overlap with the tokens at issue in the federal class action. Rayfield was explicit about his motivation: with the SEC stepping back from crypto enforcement, states must fill the void to protect their own residents from what Oregon characterizes as high-risk, unregistered investment products. The Oregon lawsuit represents a different legal pathway than the federal class action. State securities laws, often called “blue sky laws,” can impose their own registration requirements and remedies independent of federal law. This means Coinbase could potentially face liability under Oregon law even if it prevails on federal claims.
The tradeoff for state-level enforcement, however, is one of scope and resources. Oregon’s attorney general does not have the SEC’s budget or nationwide jurisdiction, and a state-level ruling would directly affect only Oregon residents — though it could influence how other states approach similar cases. Coinbase has responded by moving to transfer the Oregon case to federal court, arguing that the state action interferes with federal regulatory efforts and that the issues at stake are inherently federal in nature. This is a common defense tactic, and the outcome of the transfer motion will determine whether the case proceeds under state or federal procedural rules. If the case stays in state court, Coinbase may face a more plaintiff-friendly environment. If it moves to federal court, it could potentially be consolidated or coordinated with the existing federal litigation in New York.
What Coinbase Users Should Know About the Discovery Phase
With the federal class action now in discovery, both sides are exchanging documents, taking depositions, and building their evidentiary records. For Coinbase users who purchased any of the 79 tokens named in the lawsuit, the most important thing to understand is that no settlement exists and no claims process is open. There is nothing to file right now. Any website or email claiming you can submit a claim for the Coinbase class action at this stage is likely a scam — exercise extreme caution. Discovery is often the longest and most contentious phase of complex securities litigation. Coinbase will be required to produce internal communications, business records, and data about how tokens were listed, marketed, and sold on its platform.
Plaintiffs will be looking for evidence that Coinbase knew or should have known that certain tokens met the legal definition of a security and chose to list them anyway without registration. Coinbase, in turn, will seek to demonstrate that its token listing process was conducted in good faith and that the tokens do not satisfy the criteria for securities classification. One important limitation for potential class members: the class has not yet been certified by the court. Class certification is a separate legal hurdle that requires the plaintiffs to demonstrate, among other things, that common questions of law and fact predominate over individual issues. If the class is certified, affected users may automatically be included unless they opt out. If class certification is denied, individual plaintiffs would need to pursue their own claims — a far more expensive and impractical path for most retail investors. Watch for updates from Silver Golub & Teitell LLP, which is lead counsel, or from the court docket itself for official developments.
The Broader Legal Question — Are Crypto Tokens Securities?
The Coinbase litigation sits at the center of a legal debate that has consumed the crypto industry for years. The traditional test for whether an asset is a security — the Howey test, derived from a 1946 Supreme Court case — asks whether an investment of money was made in a common enterprise with an expectation of profits derived primarily from the efforts of others. Applying this decades-old framework to digital tokens has proven deeply contentious. A token like Solana, for instance, powers a decentralized blockchain network used by thousands of developers, but its initial distribution and the role of the Solana Foundation in its development could arguably satisfy the Howey criteria.
The same analysis plays out differently for each of the 79 tokens in the case, which is part of what makes this litigation so complex and consequential. The outcome of the Coinbase class action could establish important precedent on this question, particularly in the Second Circuit, which covers New York — the financial capital of the United States. If the court finds that some or all of the 79 tokens are securities, it would send shockwaves through every exchange, project, and investor in the crypto ecosystem. If Coinbase prevails, it could provide a legal roadmap for how exchanges can operate without securities registration. Either way, the case is likely to be appealed, and the question may reach the Supreme Court.
What Comes Next for the Coinbase Class Action
As of early 2026, the Coinbase securities class action is grinding through the discovery process with no trial date set. Based on the typical timeline for complex securities litigation in the Southern District of New York, this case could take another one to three years to reach trial — assuming it does not settle first. Settlement discussions often intensify after discovery reveals the strength or weakness of each side’s evidence, and many class actions of this magnitude resolve before trial.
Meanwhile, the regulatory landscape continues to shift. The SEC’s retreat from crypto enforcement, the emergence of state-level lawsuits like Oregon’s, and ongoing congressional efforts to pass comprehensive crypto legislation all create a moving target for both sides. Coinbase has shown it is willing to fight aggressively in court, and the plaintiffs have shown they can survive the exchange’s efforts to end the case early. For the millions of retail investors who bought tokens through Coinbase, the resolution of this case — whenever it comes — could determine whether they are entitled to compensation for losses sustained on assets that perhaps should never have been sold to them without proper disclosure.
Frequently Asked Questions
Is there a Coinbase class action settlement I can claim right now?
No. As of early 2026, the case is in the discovery phase and no settlement has been reached. Any site claiming you can file a Coinbase class action claim right now is not legitimate.
Which tokens are involved in the Coinbase securities class action?
The lawsuit names 79 digital tokens, including SOL, DOGE, ADA, SHIB, MATIC, XRP, DOT, LINK, UNI, ATOM, MANA, XLM, COMP, MKR, ALGO, AAVE, ICP, and FIL, among 61 others.
Did the SEC drop its case against Coinbase?
Yes. On February 21, 2025, the SEC dismissed its enforcement action against Coinbase with prejudice. Coinbase paid no fines and kept its business model intact. However, the private class action (*Underwood v. Coinbase*) is a separate case and continues.
Am I automatically part of the class action if I bought tokens on Coinbase?
Not yet. The class has not been certified by the court. If and when it is certified, affected users who purchased the named tokens during the relevant time period would typically be included automatically unless they choose to opt out.
What are rescissory damages?
Rescissory damages aim to return investors to the financial position they were in before purchasing the tokens. In practice, this could mean recovering the difference between what you paid and what the tokens were worth when sold or at the time of judgment.
Does the Oregon attorney general lawsuit affect me if I don’t live in Oregon?
The Oregon lawsuit filed in April 2025 specifically covers sales to Oregon residents. However, it names 31 tokens and could set legal precedent that influences other state actions or the federal class action. If you live in another state, watch for whether your state attorney general takes similar action.