Wednesday, March 7th 2018

Only Somewhat Classy: Coinbase Hit With Multiple Class Action Lawsuits

Discuss (9 Comments)
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.
Show 9 Comments