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Whether Section 11 of the Securities Act requires plaintiffs to trace shares to the registration statement.
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Whether this traceability requirement applies equally under Section 12(a)(2).
The company emphasized that the Ninth Circuit’s recent decision in Pirani v. Slack Technologies Inc. reaffirms that even a high statistical probability does not meet the traceability threshold. Similarly, the Fifth Circuit’s stance in Krim v. pcOrder.com warns that relying on statistics would improperly expand standing requirements.
Coinbase argues that Judge Martinotti’s ruling not only contradicts these higher court decisions but also creates uncertainty within the Third Circuit. An immediate appeal, it says, would likely narrow the case significantly—potentially eliminating three of five claims and dismissing several defendants.
“Multiple federal courts have firmly rejected the use of statistical inference to establish traceability, especially in direct listing scenarios. We believe the Third Circuit should now bring clarity and consistency to this critical issue,” said Coinbase’s legal team.
The underlying class action, Patel v. Coinbase Global Inc., was formed through a consolidation of two cases in December 2022 and is led by Swedish pension fund Sjunde AP-Fonden. The suit alleges misrepresentations by Coinbase regarding business risks, including bankruptcy treatment of assets and potential regulatory enforcement by the SEC.
While Judge Martinotti declined to reconsider his order last week, Coinbase maintains that the court still has the opportunity to align its ruling with those of other federal appeals courts.
Legal counsel for the plaintiffs and Coinbase have yet to comment publicly on the motion.
