SDNY COURTHOUSE, March 16 – A case against Coinbase for its actions when
Terraform Labs' LUNA crashed in May 2022 was up for a
hearing on March 13 before U.S. District Court for the
Southern District of New York Judge Jed S. Rakoff. Inner
City Press was there, and live tweeted.
Things went round and round,
about arbitration clauses and Coinbase's choice of venue,
about LUNA death spiral and what came out in the SEC case
before Judge Rakoff, which Inner City Press covered, as it
did the criminal case against Do Kwon, his guilty plea and
sentencing.
But then things caught fire, when
Coinbase's lawyer said that while the amended complaint
states that Coinbase announced" that trading in WLUNA
would be 'temporarily' suspended," Coinbase has not been
able to find any statement of its to that effect. Counsel
said they'd raised to the plaintiffs' lawyer, who in the
amended complaint took out all quotation marks around
"temporarily" - except this one.
Judge Rakoff, shifting into his
rising-anger voice, asked both plaintiffs' lawyer to
explain. One deferred to the other, who deferred
back.
Well someone better answer, or I'll be
imposing sanctions. $10,000 was mentioned. But might it
have an impact on the motion to dismiss, or to stay and
compel arbitration?
On March 16 Judge Rakoff ruled that "plaintiffs are hereby given leave to try to cure these deficiencies by filing a Second Amended Complaint by no later than March 20, 2026 (a date that will not be adjourned under any circumstances)" - and that he will consider the sanctions issue before April 15. Full Order on Patreon here
More analysis on X for Subscribers here
and Substack here
The case is Heabeart et al v. Coinbase, Inc. et al. 1:25-cv-9197 (Rakoff)
