Coinbase takes New York legal battle to federal court
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Coinbase Global (Nasdaq: COIN), the largest crypto trading exchange in the United States, is taking the prediction markets lawsuit in New York to a federal court.
The exchange also offers prediction markets which have become very popular following the 2024 U.S. presidential elections. But these markets are facing intense legal scrutiny over allegations of gambling and insider trading.
Related: Coinbase recieves conditional OCC charter trust approval
NYAG sues Coinbase
On Apr. 21, New York's attorney general Letitia James sued Coinbase Financial Markets and Gemini Titan for allegedly running illegal gambling operations through prediction markets.
These illegal operations expose New Yorkers, including those under the legal gambling age of 21, to serious risk, James said.
The suit seeks penalties, forfeiture of alleged illegal profits, and restitution and urges the court to restrain these platforms from launching similar prediction markets in New York without complying with state law.
Coinbase’s chief legal officer, Paul Grewal, shared on X that it has transferred the lawsuit from state court to federal court as New York’s claims raise disputed and substantial questions of federal law.
The bone of contention is who regulates prediction markets: state-level gambling laws or the Commodities and Futures Trading Commission (CFTC).
Grewal earlier said Coinbase will continue to fight for the federal oversight of prediction markets as intended by Congress.
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Investors looking forward to Coinbase's prediction markets strategy
As reported earlier, Coinbase is scheduled to report Q1 2026 earnings on May 7. Cantor Fitzgerald said investors will look at upcoming earnings as "backward-looking" due to the ongoing crypto crash.
But they are looking forward to the "forward-looking" comments by the company's management, especially around prediction markets amid regulatory drama.
The investment firm also raised Coinbase's stock price target from $221 to $250 and maintained an "Overweight rating."
The COIN stock was trading 5% higher at $206.71 at press time.
Related: 81-year-old investment firm boosts Coinbase stock target
