For something to be illegal, there needs to be an explicit law prohibiting said action. In other words, someone needs to be able to know ahead of time that a particular action is prohibited, so they can act accordingly. For something to be unethical, they will need to consult with community standards, which may change from time to time, and may change retroactively. There are no due process protections when someone does something unethical.
While there are most probably laws for (actually against) that in case of stocks or securities, I am not sure they apply for crypto "products", since legislation (as explicit words) is wonderfully missing them.
However, the spirit of the law may include them and a judge may go by that. Even more, I expect that a company like Coinbase has an internal code of conduct for the employees explicitly prohibiting that (if they don't have that, they're incredibly sloppy); but I don't know how much do company rules mater in a lawsuit.
It's... difficult to say what's going to happen there...