12:49 PM EDT, 09/06/2024 (MT Newswires) -- Coinbase Global ( COIN ) will face a class action lawsuit by its shareholders for misleading them about the risk of possible legal challenge by a US regulator, a federal judge ruled, according to media reports Friday.

In a ruling issued Thursday, Judge Brian Martinotti of the US District Court for the District of New Jersey said the shareholders adequately alleged that the cryptocurrency exchange had defrauded them, the reports said.

The US Securities and Exchange Commission sued Coinbase in June 2023 for operating an unregistered securities exchange.

The shareholders could also pursue for certain claims about allegedly undisclosed risks in the event of a bankruptcy filing, according to Martinotti, the reports said.

A Coinbase spokesperson, however, told MT Newswires that the court also struck out a significant portion of the claims. The company looks forward to defending itself in the court.

"It's important to note that the remaining pieces are allowed to move forward because of the way this motion to dismiss works: the court draws inferences based on the plaintiff's allegations rather than the reality of what happened," the spokesperson said.

Coinbase shares were down over 5% in recent trading.

Price: 150.71, Change: -8.99, Percent Change: -5.63