Coinbase Hit With Class Activity holding Insiders Profited From ‘Bitcoin Cash’ Launch.
Coinbase, a digital currency exchange came across a new lawsuit alleging that their employees and other related insiders have collected massive amount by trading on confidential information that the cryptocurrency exchange decided to support transactions in a Bitcoin offshoot called Bitcoin Cash.
On Thursday, the U.S. District Court for the Northern District of California filed in “The class action suit.” It appears to be the first filed in a federal court alleging insider trading-like claims over Coinbase’s announcement that it would handle transactions in Bitcoin Cash last December.
The complaint says that insiders crowed the price of Bitcoin Cash, also known as BCH, by executing buy and sell orders moments after the move by Coinbase—one of the largest cryptocurrency exchanges in the world.
The action started the value of the cryptocurrency to raise-up by 200 percent in a while after trading opened on Dec. 19, the complaint adds. That forces Coinbase to briefly freeze the trading, while remaining Bitcoin Cash purchasers were forced to pay “artificially inflated prices that had been manipulated well beyond the fair market value of BCH at that time,” it alleges.
The complaint clarifies that Coinbase CEO Brian Armstrong has openly accepted the impression of insider trading and promise to engage in an internal investigation, “to date, neither Armstrong nor the company has disclosed the result of its purported investigation.”
Green & Noblin has filed a complaint which is based in Larkspur, California, and also by The Grant Law Firm in New York. An Arizona base resident, plaintiff, Jeffrey Berk, is who claims that his buy order for BCH was executed at roughly double the price as when he submitted it.
However, Coinbase did not quickly respond to an email looking for comment about the lawsuit.
Even if the complaint makes insider trading-like allegations, it cites California’s Unfair Competition Law and ordinary law negligence as causes of action—likely because BCH is not currently regulated as security. The Commodities Futures Trading Corp. has said that Bitcoin is a commodity.
BCH has created a “hard fork ” of the Bitcoin blockchain which was in last year—the creation of a variant of the original software. The complaint also reveals that Coinbase initially suggested it would not handle transactions in BCH. Later, the company said that it would begin supporting some transactions in BCH in January 2018 but then a short changed course by opening trading on Dec. 19, the complaint alleges.
In a blog post, a senior Coinbase manager stated that employees were informed about a month ahead of time that support for trading in BCH was coming. Those employees “were explicitly prohibited from buying and selling BCH,” he added. “All employees were also barred from sharing this information with anyone outside of Coinbase.”