Coinbase is one of the largest cryptocurrency exchanges in the world. However, it is also a target of lawsuits these days. Some users of the platform have filed an official complaint regarding the company’s alleged “insider trading” of Bitcoin Cash. Whether or not there is any truth to such claims remains to be determined, though.
Another Coinbase Lawsuit Materializes
It is not the first time Coinbase has faced a major lawsuit. The previous legal action was part of its ongoing spat with the IRS, which eventually ended in a win for the government agency, albeit in a limited fashion. This latest lawsuit, however, may prove to be a lot more damaging for the company. Allegations regarding insider trading associated with the listing of Bitcoin Cash is not something to be brushed aside.
Although it remains to be seen how much truth there is to these claims, the lawsuit paints an interesting picture. It claims that company employees and a few other “insiders” reaped major profits from knowing Bitcoin Cash trading would be going live on the Coinbase platform. Considering that this information was not shared with the public initially, it is evident there are a lot of questions to be answered by the company.
With these insiders driving up the Bitcoin Cash price, they may also be partially responsible for the halting of BCH trading on the platform in the few hours after the trading pair went live. As most people will recall, the Bitcoin Cash value spiked on the exchange by over 200% in mere minutes after the launch of trading. This caused a lot of confusion and friction among users.
Even though Coinbase halted all BCH trading at that time, the lawsuit claims that some users were forced to pay artificially inflated prices which were manipulated to be well beyond the actual BCH value at the time. It’s an interesting statement, although it will be virtually impossible to confirm. It is true some people purchased BCH at several thousands of dollars over the actual market price, but whether or not this is Coinbase’s fault is a different matter altogether.
It seems the lawsuit in question was filed by Green & Noblin, a firm located in California. They are joined by the Grant Law Firm in New York. Surprisingly, the person responsible for filing this lawsuit is a resident of Arizona who was personally affected by the Bitcoin Cash trading debacle. Jeffrey Berk claims his buy order was processed at twice the value at which he’d originally submitted it. It’s a very troublesome development if true, yet it remains to be seen how much truth there is to this statement.
It is interesting that this lawsuit alleges insider trading, even though it remains to be seen if this is something Coinbase should be worried about. There is also a reference to California’s Unfair Competition Law and common law negligence, which is significant in light of the current lack of cryptocurrency regulation. It is certainly possible things will not work out in favor of Berk, but it is too early to draw any conclusions on this front.