On April 11, 2025, a cryptocurrency platform (the "Company") moved to certify for interlocutory appeal the September 5, 2024 decision by Judge Brian R. Martinotti of the United States District Court for the District of New Jersey, granting in part and denying in part the Company's motion to dismiss. In re Coinbase Global, Inc. Sec. Litig., Civ. No. 2:22-cv-4915-BRM-LDW (D.N.J.). The Company seeks interlocutory review of the Court's statutory standing analysis under Section 11 of the Securities Act of 1933 (the "Securities Act"), specifically challenging the Court's acceptance of plaintiffs' "statistical inference" theory of traceability for aftermarket purchasers in a direct listing—a theory that has been rejected by both the United States Courts of Appeals for the Fifth and Ninth Circuits. See Krim v. pcOrder.com, Inc., 402 F.3d 489 (5th Cir. 2005); Pirani v. Slack Techs., Inc., 127 F.4th 1183 (9th Cir. 2025).
The litigation arises from the Company's April 2021 direct listing, in which both registered and unregistered shares allegedly became available for public trading. Plaintiffs allege they "acquired [Company] common stock pursuant and/or traceable" to the direct listing's offering materials. They further allege that they purchased Company stock on the day of the direct listing, at prices near the opening price and at a time when 88% of the Company's outstanding shares were registered. They allegedly purchased Company stock again on the aftermarket, at a time when 74% of shares outstanding were registered. Plaintiffs later brought the instant putative securities class action, alleging that the offering materials issued in connection with the direct listing misrepresented and omitted particular risks regarding the Company's business. Plaintiffs assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), and Sections 11, 12(a)(2), and 15 of the Securities Act.
In response to the Company's motion to dismiss, the Court ruled that plaintiffs adequately pleaded most of the alleged misstatements and omissions undergirding their Exchange Act and Securities Act claims, as well as the other crucial substantive elements required to state the claims asserted. As to the Company's challenge that plaintiffs failed to adequately allege traceability to sustain standing under Section 11, the Court concluded that although plaintiffs did not proffer facts that explicitly established any particular share's chain of title could be traced back to the direct listing's offering materials, the Court could statistically infer traceability from plaintiffs' allegations concerning the portion of outstanding, registered shares at the time of their alleged purchases. The Court validated this approach by relying upon decisional law from out-of-circuit district courts that permitted Section 11 standing at the pleading stage based either upon a similar theory of "statistical inference" or even more generalized, non-specific traceability allegations.
The Company moved under 28 U.S.C. § 1292(b) for interlocutory review of the Court's Section 11 ruling or, in the alternative, for the Court to reconsider. The Company emphasizes that the statistical inference theory has been rejected by the Fifth Circuit, the Ninth Circuit, and a growing majority of district courts, including a recent decision from the District of Colorado, which we covered here. The Company argues that the Court's decision presents an outlier that constitutes "substantial ground for difference of opinion" warranting interlocutory review. The Court will hear the Company's motion on May 19, 2025. The Company's motion for judgment on the pleadings pursuant to Rule 12(c) is simultaneously pending before the Court.
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