New York AG Sues Coinbase, Gemini Over Alleged State Law Violations

In a case that stands out in today’s pro-crypto climate in the US, New York Attorney General (AG) Letitia James has filed a lawsuit targeting Coinbase Financial Markets and Gemini Titan, subsidiaries of the two major exchanges. 

The action, brought on Tuesday, accuses the crypto companies of violating state law by allegedly operating prediction markets in a way that falls under New York’s rules for illegal gambling.

Coinbase And Gemini Lawsuit

According to complaints filed in Manhattan state court and reviewed by Reuters, James says both Coinbase (COIN) and Gemini (GEMI) failed to obtain the necessary licenses from the New York State Gaming Commission to run their prediction markets. 

James’ argument hinges on New York’s legal definition of gambling. She claims the outcomes in these markets are either outside the control of those placing bets or resemble games of chance, which, in her view, means they should be regulated as gambling rather than treated as a legitimate market activity. 

The attorney general also alleges that the platforms are accessible to users younger than the legal age limit. Her complaint says Coinbase and Gemini permitted 18- to 20-year-olds to use their platforms, even though New York law sets 21 as the minimum age for mobile sports betting.

James also framed the case as a matter of regulation, not branding. “Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution,” she said in a statement.

COIN And GEMI Fall After New York Filing

The lawsuit seeks several forms of relief. The attorney general is asking the court to require repayment of profits deemed illegal, along with civil penalties equal to triple those profits and restitution to customers. 

James also wants the court to block Coinbase and Gemini from allowing anyone under 21 to place wagers. In addition, she is seeking restrictions on how the companies market their platforms, including a request to bar them from promoting the services on college campuses.

As of the time of writing, no additional details about the case had been disclosed, and no official statements had been issued publicly by Coinbase or Gemini executives. 

Instead, the companies’ exposure to the news was reflected in market reaction. COIN fell about 10%, trading around the $200 level, while GEMI dropped roughly 4%, moving below $5.

Featured image from OpenArt, chart from TradingView.com