• New York Attorney General Letitia James sued Coinbase and Gemini, alleging both platforms operated unlicensed prediction markets.
• The lawsuits claim the platforms enabled illegal gambling for New York users under 21 years old.
• James seeks penalties, profit forfeiture and fines worth three times the profits the companies made.

Letitia James filed lawsuits against Coinbase and Gemini on Tuesday, alleging the companies operated unlicensed prediction markets that facilitated illegal gambling under New York law.

In complaints filed in Manhattan state court, the attorney general claims the platforms enabled users to wager on the outcomes of future events without obtaining the required licenses or implementing appropriate safeguards.

“Gemini and Coinbase’s so-called prediction markets are just illegal gambling operations, exposing young people to addictive platforms that lack the necessary guardrails,” said James.

Letitia James claims crypto exchanges operated without required gaming licenses

The lawsuits allege that both companies made their prediction markets available to users aged 18 to 20, despite the state’s minimum age of 21. They also permitted wagers on games involving New York college teams, which are prohibited under state law. 

James further alleged that neither company obtained authorization from the New York State Gaming Commission.

Licensed operators are required to pay taxes that support public programs, including education, youth sports and problem-gambling services. By operating outside this framework, the firms allegedly avoided these obligations while generating revenue from the offerings. 

The complaints also cite potential risks to younger users, referencing research that links early exposure to gambling. This exposure may lead to an increased likelihood of mental health and financial challenges.

James is seeking court orders requiring both companies to forfeit profits derived from the activities, provide restitution to affected users, and pay financial penalties of up to three times the revenue generated.

In other news, Coinbase said it has suspended trading for multiple perpetual futures contracts and automatically settled all open positions. 

In a statement on X, Coinbase stated that the remaining positions were closed using final settlement prices calculated as the average index price.

The exchange said the move is part of ongoing efforts to maintain “high-quality derivatives markets by focusing on products that consistently meet our liquidity and market-quality standards.” 

Coinbase also noted that streamlining its derivatives offerings would enable it to support core markets better and introduce new products more efficiently.