New York Attorney General Letitia James has sued cryptocurrency exchanges Coinbase and Gemini, alleging their “prediction market” platforms constitute illegal, unlicensed gambling. The lawsuit, filed on April 21, demands the companies pay penalties, forfeit illegal gains, and reimburse customers. It also criticizes age-verification failures and notes the platforms lack a required state gaming license.
New York Attorney General Letitia James sued Coinbase and Gemini on April 21, accusing the exchanges of operating illegal gambling through their prediction markets. An investigation found these markets were unlicensed gambling operations.
Attorney General James urged the companies to settle penalties, waive illegal gains, and reimburse affected customers. Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution, she stated.
The lawsuit also flagged flaws in the platforms’ 18-21 age requirement, which allegedly exposed underage users. Exposing young people to online gambling can have damaging effects on their mental and financial wellbeing, James added.
Furthermore, the NYAG claimed Coinbase and Gemini lacked licenses from the New York State Gaming Commission. This suggested an avoidance of tax obligations, raising concerns about their state operations.
Coinbase Chief Legal Officer Paul Grewal dismissed the allegations and vowed to fight the lawsuit. The exchanges launched their prediction platforms in mid-December 2025, operating in all 50 states.
They launched in response to the popularity of prediction markets during the 2024 U.S. presidential election. Competitor Polymarket has since announced plans for a native stablecoin amid these legal challenges.
Prediction markets like Polymarket and Kalshi have faced regulatory actions before. Polymarket was banned in 2022 and Kalshi ceased operations in 2025, though both now operate normally.
