Skip to main content


April 29, 2024

Actions in the Federal Courts – Month in Review Newsletter – April 2024

Judge denies crypto firm Coinbase’s bid to dismiss SEC suit, joining a growing list of federal judges holding that cryptocurrency tokens are subject to the protections of the securities laws (SEC v. COINBASE, INC., No. 1:23-cv-04738-KPF (Mar. 27, 2024) (S.D.N.Y.))

On March 27, in another significant victory for the SEC, Judge Katherine Polk Failla rejected the attempt by cryptocurrency exchange Coinbase to defeat the SEC’s claims that Coinbase unlawfully operated as an unregistered securities exchange, broker, and clearing agency. Coinbase argued in its motion for judgment on the pleadings that its crypto offerings were not securities.  However, Judge Failla held the SEC had adequately alleged that those who bought certain digital assets through Coinbase “invested in a common enterprise and were led to expect profits solely from the efforts of others,” thus satisfying the Howey test for identifying investment contract securities.   On April 12, 2024, Coinbase filed a motion for an interlocutory appeal, seeking to immediately challenge Judge Failla’s ruling in the Second Circuit

A federal jury finds crypto firm Terraform Labs and it founder Do Kwon liable for securities fraud (SEC v. TERRAFORM LABS, PTE LTD & DO KWON, No. 1:23-cv-1346 (S.D.N.Y.) (Apr. 05, 2023))

The SEC filed an enforcement action in February 2023 alleging that Terraform and Do Kwon had orchestrated a multi-billion-dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.  The case headed to trial on the securities fraud claims after Judge Rakoff held as a matter of law that Terraform’s four crypto assets were securities under the Supreme Court’s Howey test for investment contracts. On April 5, 2024, after a nine-day trial, a jury in the U.S. District Court for the Southern District of New York quickly returned a verdict finding Terraform Labs and Do Kwon liable for defrauding investors with their crypto asset securities. Following this verdict, the SEC filed a motion with the court requesting $5.3 billion in disgorgement and civil penalties. The SEC also proposed barring Do Kwon from serving as an officer or director of a securities issuer. This case is another in the SEC’s persistent and commendable effort to hold crypto fraudsters accountable.

Fifth Circuit Court of Appeals reverses Trump-appointed judge’s rejection of the financial industry’s forum-shopping (U.S. CHAMBER OF COMMERCE v. CFPB, No. 4:24-CV-00213-Y (N.D. TEX.) (Mar. 07, 2024) (Nos. 24-10248 & 24-10266, 5th Cir.))

After the U.S. Chamber of Commerce and other industry groups filed a lawsuit in the Northern District of Texas in early March seeking to nullify the CFPB’s new credit card late fees rule, well-founded concerns about forum-shopping quickly surfaced.  After ordering the plaintiffs to explain why the Northern District of Texas was the proper venue for the case, as opposed to Washington, D.C., Judge Mark Pittman on March 28 transferred the case to Washington, D.C., which he felt was a more appropriate venue. However, on April 5, the Fifth Circuit ruled that Judge Pittman did not have the authority to send the case to D.C. The appellate panel reasoned that because the plaintiffs had earlier lodged an appeal challenging Judge Pittman’s de facto denial of their request for a preliminary injunction against the rule, the district court had been stripped of jurisdiction over the case.  These developments are at once discouraging and heartening.  Industry groups are shamelessly contriving grounds for bringing challenges to agency actions in Texas, where they are likely to draw district court and appellate court judges favoring industry positions. But the issue is being publicly exposed, with at least one Texas judge taking a dim view of the industry’s choice of forum.

Supreme Court unanimously limits securities liability for omissions of material facts (MACQUARIE INFRASTRUCTURE CORP v. MOAB PARTNERS, L.P., No. 22-1165 (Apr. 12, 2024))

On December 20, 2023, Better Markets joined an amicus brief filed in the U.S. Supreme Court in the case of Macquarie Infrastructure Corp v. MOAB Partners, L.P.  The brief supported investors who allege they suffered damages after a company deliberately and repeatedly failed to disclose important information about its business prospects in reports required to be filed with the SEC.  As we explained in the brief, the reality is that omissions of material information can be just as damaging to investors as outright lies and the law should amply protect investors from both forms of deceit.  Unfortunately, on April 12, 2024, the Supreme Court held unanimously that a failure to disclose required information in a regulatory report cannot support a private action for fraud under Rule 10b-5(b), in the absence of some additional otherwise-misleading statement that silence allows to go uncorrected. The decision is a setback for investors and markets alike, as it will reduce the disclosure of important information, which is the lifeblood of our robust securities markets.



For media inquiries, please contact us at or 202-618-6433.

Contact Us

For media inquiries, please contact or 202-618-6433.

To sign up for our email newsletter, please visit this page.

This field is for validation purposes and should be left unchanged.

Sign Up — Stay Informed With Our Monthly Newsletter

"* (Required)" indicates required fields

This field is for validation purposes and should be left unchanged.

For media inquiries,

please contact or 202-618-6433.


Help us fight for the public interest in our financial markets, protecting Main Street from Wall Street and avoiding another costly financial collapse and economic crisis, by making a donation today.

Donate Today