Tuesday, March 7th 2017

Only Somewhat Classy: Coinbase Hit With Multiple Class Action Lawsuits

Coinbase, which is mostly regarded as one of the most transparent, well regarded cryptocurrency exchanges in the cryptocurrency world, is now being hit with class action lawsuits on themes it would really not like to be associated with. Readers should think on which one of these is worse: insider trading, or crypto theft. For a company that's apparently trying its hardest to become a bastion of transparent crypto trading, going so far as to share data on 13,000 customers to the IRS, these class action lawsuits, if proven, will do irreversible damages to the company's standing.

The insider trading class action lawsuit revolves around the introduction of BCH (Bitcoin Cash) to its staple of tradeable cryptocurrencies. Now, here's the thing: it's nigh impossible for a company not to do, or not to be accused of, to be more precise, of insider trading on this thing. It's almost guaranteed that the company would have invested on Bitcoin Cash in the early stages of its fork and spin-off from Bitcoin. And the company controls at which times they'll enable trading of the cryptocurrency on their platform - an announcement and move which would certainly increase awareness and trade volume on that cryptocurrency, both before and after it's been actually integrated into the exchange. This class action lawsuit is being headed by Jeffrey Berk, who's representing all customers that placed buy, sell or trade orders for BCH between December 19 and December 21, 2017.
The complaint alleges that "When Coinbase's customers' trades were finally executed, it was only after the insiders had driven up the price of BCH, and thus the remaining Bitcoin customers only received their BCH at artificially inflated prices that had been manipulated well beyond the fair market value of BCH at that time." Well, that seems like something that the company will have a hard time distancing itself from. Coinbase's CEO Brian Armstrong has announced an internal investigation into these accusations (which aren't new, but only now have been put into a class action), but nothing of note has come out of that internal investigation until now.

The second class action lawsuit is still of note, even if it doesn't have the same impact when it comes to potential number of customers affected (that we know of). It pertains to Coinbase apparently failing to notify users of existing, unclaimed balances on their Coinbase accounts. Apparently, the lawsuit alleges, Coinbase decided to keep these funds to themselves,s instead of looking for ways to restitute them to their rightful owners. This was apparently caused by Coinbase's operating procedure regarding sending coins to non-members (apparently, in these cases, the attempts flunked). The two men filing the suit allege they received reminders of an unclaimed Bitcoin balance but were unable to claim the coins since the email link had expired. Source: TechSpot
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9 Comments on Only Somewhat Classy: Coinbase Hit With Multiple Class Action Lawsuits

#1
R-T-B
The first suit is bizzare, especially considering Coinbase did not WANT to add BCH at all to its trading platform, only begrudgingly adding it when it became aparent NOT doing so may have led to class action suits. It strikes me as a "damned if they do, and damned if they don't" type of situation and I see it likely being dismissed.

To this day, BCH is a second-class citizen on their trading platform, not even having a fully functional "set buy/sell point" in several places, including the mobile app.

The second suit is more interesting to me. I will need to know more before I can comment on it. Funny we aren't even seeing any fallout from the VISA thing everyone assumed was so bad...
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#2
Super XP
Coinbase is the only Crypto exchange that offers the most easiest way to convert fiat into crypto. It will also be difficult to prove insider trading. Though anybody in the company that knew about the Bitcoin Cash introduction, would have known it would go up in value once such exchange announces support for it.
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#6
FordGT90Concept
"I go fast!1!11!1!"
I don't know. Handing over data on 13,000 accounts seems to me almost like a bribe to the IRS in "please don't audit me" fashion.
Posted on Reply
#7
Super XP
lexluthermiester said:
When I see the word "Fiat" I think of a car; https://en.wikipedia.org/wiki/Fiat_Automobiles
Not following your use of that word here..
Fiat is Currencies. That is what they are called. $$$$$ whether it be usd, cad, eur. etc.,

Ah I just noticed someone else explained the other meaning of Fiat.
Posted on Reply
#8
R-T-B
FordGT90Concept said:
I don't know. Handing over data on 13,000 accounts seems to me almost like a bribe to the IRS in "please don't audit me" fashion.
I may agree if the accounts were randomly chosen. However, they were not. They are specifically the most high roller accounts.
Posted on Reply
#9
FordGT90Concept
"I go fast!1!11!1!"
Um, why wouldn't they focus on the large accounts? They're easy to find in a database. Thing is, that's not necessarily what the IRS wants. IRS wants tax evasion regardless if the account is $1 or $1 billion. CoinBase likely did what they did because it would create the least angst amongst their users.

I think it's the SEC that's been getting search warrants for crooked exchanges, not the IRS. It'll be interesting to see if that's coming. The SEC will no doubt be watching the class action lawsuits for evidence of insider trading.
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