New York AG sues Coinbase, Gemini over illegal gambling
April 22 (UPI) -- New York Attorney General Letitia James has filed lawsuits against cryptocurrency companies Coinbase and Gemini for violating state gambling laws.
The lawsuit, filed Tuesday, targets the companies' prediction markets. James said prediction markets fit the state's legal definition of gambling.
"Gambling by another name is still gambling and it is not exempt from regulation under our state laws and Constitution," James said in a statement. "Gemini and Coinbase's so-called prediction markets are just illegal gambling operations, exposing young people to addictive platforms that lack the necessary guardrails."
James seeks for the companies to forfeit "illegal profits" they made from their prediction markets.
Prediction markets allow users to wager or trade on whether or not certain events will happen, generally on a "yes" or "no" basis. This includes trading on outcomes in sports, the weather and in some cases world events.
Some of Coinbase's trades have closely mirrored sports betting. James' lawsuit alleges that Coinbase allowed bettors to "wager on whether the New York Knicks would win a basketball game by over 6.5 points." The margin of victory is also known as the "spread" in sports betting
Coinbase and Gemini are not licensed by the New York State Gaming Commission.
Coinbase and Gemini entered the realm of prediction markets last year. Lawmakers across the country have been weighing how to regulate prediction markets as their popularity has grown. Kalshi, one of the most popular prediction markets, is regulated by the Commodity and Futures Trading Commission.
"Prediction markets are federally regulated national exchanges," Paul Grewal, chief legal officer for Coinbase, posted on social media. "This issue is proceeding in New York federal court as we speak. Coinbase will continue to fight for the federal oversight of these markets that Congress intended."
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