A lawsuit targeting Coinbase over its suspension of WLUNA trading during the 2022 Terra collapse just hit a turning point, with a federal judge tossing securities claims and pushing the case into arbitration.
• New Development: Ruling for the United States District Court, Southern District of New York, Judge Jed S. Rakoff has dismissed securities law violation claims against crypto exchange Coinbase over its suspension of WLUNA trading, remanding the remainder of the case (which accuses Coinbase of breach of contract, fraud, and conversion) to arbitration.
• Glaring Hole: During a March 13 hearing, Coinbase’s counsel challenged the plaintiffs’ claim that WLUNA trading had been described as “temporarily” halted, noting they could not substantiate the assertion. The inability to support the claim drew a sharp rebuke from Judge Rakoff, who warned of potential sanctions and pushed plaintiffs’ lawyers to revise their complaint to address the deficiencies flagged by the court.