Ontario Superior Court dismisses class action suit against crypto platform Coinbase

The Ontario Superior Court of Justice had dismissed on jurisdictional grounds a motion brought in a class action lawsuit related to the cryptocurrency platform Coinbase.

The defendants sought to dismiss the case, citing lack of jurisdiction, and argued for a permanent stay based on the principle of forum non conveniens. The plaintiff, who initiated the class action, alleged mishandling by Coinbase concerning the platform’s management of digital assets and cryptocurrency contracts.

The plaintiff’s interaction with Coinbase began in 2017 through a user agreement with Coinbase UK Ltd., which later involved other Coinbase entities, including Coinbase Europe and Coinbase Inc. The agreements governed the sale and purchase of digital assets, stipulating that disputes would be subject to the laws of Ireland and England.

However, by 2023, the relationship had shifted to Coinbase Canada Inc., aligning with regulatory changes and a strategic restructuring within Coinbase to localize operations in Canada. This transition prompted the plaintiff to file a claim asserting that the cryptocurrency sold on the Coinbase platform constituted securities. He claimed these were issued without adhering to necessary disclosure requirements mandated by securities legislation across Canada, posing significant risks to investors.

The court's jurisdictional analysis was multi-faceted, considering whether Coinbase’s operational changes and the plaintiff's agreements with various Coinbase entities established a sufficient legal basis for the Ontario court to hear the case. The court found that, while Coinbase Canada had a discernible business presence in Ontario, other Coinbase entities did not meet the threshold to be considered as conducting business in the province for jurisdictional purposes.

Ultimately, the court ruled that it has no jurisdiction to hear the action against Coinbase Europe, Coinbase Inc., and Coinbase Global. The court also ordered a permanent stay of the action against Coinbase Canada on the basis of forum non conveniens.