Cryptocurrency exchange Coinbase is facing two class action lawsuits, one of which is claiming insider trader information.
The first of the complaints, filed Thursday in San Francisco federal court, focuses on the launch of BCH on Coinbase in December, and alleges insider trading information. The case, which has been brought by Jeffrey Berk, is representing a group of Coinbase customers who placed purchase, sale, or trade orders on the exchange or its GDAX platform between the 19th-21st December, 2017.[1]
According to the complaint, it’s alleging that employees were aware of the listing a month prior as to when it could start supporting BCH. Consequently, employees were allowed to swamp Coinbase and GDAX with buy and sell orders at ‘fair prices.’ Once BCH came online on the exchange non-insider traders were left at a disadvantage, it states.
The complaint reads:
“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.”
Rumours of insider trading at the company soon appeared on social media; however, despite Brian Armstrong, CEO of Coinbase, announcing that the company had undertaken an investigation into alleged insider information, neither the company nor Armstrong have provided details on its results, the lawsuit states.
The second of the complaints filed Friday, also in San Francisco federal court, finds that two men are alleging that Coinbase failed to notify them that they had unclaimed cryptocurrencies in 2013. They further state that instead of turning those unclaimed coins over to the State of California the exchange kept them.[2]
According to the complaint, the two men are alleging that when they received reminders of their unclaimed bitcoin in 2018 in an email they were unable to claim their coins as ‘the email link had expired.’ It adds that when a Coinbase member sends digital currency to a non-member they only receive an email that leaves them no other option but to open a Coinbase account.
The complaint reads:
“Defendant kept, and continues to keep, unredeemed cryptocurrencies sent via email through Coinbase.com.”
These two lawsuits come at a time when the exchange is going through a tough few weeks. Last month, it was reported that some Coinbase customers had been overcharged for digital currency purchases due to a system glitch. The exchange stated that this was down to changes in how credit card processors were processing crypto charges and fees. Visa later confirmed that Coinbase was not at fault.[3]
References
- ^ first of the complaints (images.law.com)
- ^ second of the complaints (restislaw.com)
- ^ system glitch (fortune.com)
