Coinbase Must Defend Investors’ Suit Over SEC, Other Risks (1)

Coinbase Global Inc. investors adequately alleged the cryptocurrency platform company misled them about the risk of SEC action against it for operating an unregistered securities exchange, a federal court ruled.

Some of the investors’ claims about allegedly undisclosed risks associated with bankruptcy are also sound, Judge Brian R. Martinotti said Thursday for the US District Court for the District of New Jersey.

The court trimmed away some of the proposed class action’s allegations of misrepresentations about bankruptcy risks and proprietary trading by Coinbase.

A key feature of the case is its focus on regulatory risks. The investors, led by institutional ...