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Coinbase Hit With More Lawsuits
Altcoin News, Featured

Coinbase Hit With More Lawsuits

Cryptocurrency exchange Coinbase has just been hit with two federal class action lawsuits in two days, including one accusing employees of insider trading of Bitcoin Cash (BCH). The two lawsuits came in over the last few days:

Insider trading allegations – 1 March. Someone who ended up buying Bitcoin Cash at $4,000, more than twice the price at which they placed the order, is the plaintiff.
Unfair business practices – 2 March. Two people who received bitcoin via Coinbase in 2013 and 2014, but never claimed it, want to get the full amount with interest, plus returns from all the forks and airdrops since 2013/14.

 

Coinbase is one of the largest cryptocurrency exchanges in the world. However, it is also a target of lawsuits these days. The 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.

More Coinbase Lawsuits

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.

In the first lawsuit, filed on March 1, the plaintiffs claim Coinbase employees illegally profited by trading on insider information that the exchange had planned to roll out Bitcoin Cash support in December 2017. The action was filed in the U.S. District Court for the Northern District of California by lead plaintiff Jeffrey Berk on behalf of himself and a group of Coinbase customers.

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.

The lawsuit demands a jury trial and unspecified monetary damages for “all Coinbase customers who placed purchase, sale or trade orders with Coinbase during the period of Dec. 19, 2017 through and including Dec. 21, 2017… and who suffered monetary loss as a result of Defendants’ wrongdoing.”

Second Lawsuit

The second lawsuit was filed a day later, with Coinbase accused it “unlawful and unfair business practices” and violating California’s Unclaimed Property Law.

Timothy G. Faasse and Jeffrey Hansen, filing on March 2 on behalf of a class of customers, accuse Coinbase of fraudulently keeping funds they knew did not belong to them simply because users had not claimed them. The complaint alleges:

Imagine writing a cashier’s check to a friend. The bank withdraws funds from your account, but your friend never cashes the check. Does the bank get to keep the funds? The law clearly says no. But this is exactly what has happened with Cryptocurrencies sent through Coinbase.com, owned and operated by Coinbase, Inc.

Coinbase users can send Bitcoin, Ethereum, Litecoin and Bitcoin Cash (collectively “Cryptocurrencies”) to an email address. Plaintiffs and the Class were sent an email from Coinbase stating they had Cryptocurrency, with a link to create a Coinbase account to redeem it. But until 2017, most people never heard of a “bitcoin” or cryptocurrency, so most of these emails were disregarded. And most of the Cryptocurrency went unclaimed.

But instead of notifying Plaintiffs and the Class they had unclaimed Cryptocurrencies, or turning those Cryptocurrencies over to the State of California as required by California’s Unclaimed Property Law…Coinbase kept them.

The lawsuit requests a jury trial, which would be a very interesting if it comes to that. However, it is more likely to assume that these plaintiffs would be settle out of court for an undisclosed sum, if that was offered to them.

 

 

 

coinmag

Writer, Bitcoin investor

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