C ryptocurrency exchange Coinbase has been hit by a lawsuit action over alleged insider trading. According to the legal documents dated last Thursday, the case has been filed by Jeffery Berk, represents a cluster of investors that placed trading orders on Coinbase or its order book trading platform GDAX from 19th Dec 2017 – 21st Dec 2017.
According to the complaint, the lawsuit takes aim at Coinbase’s launch of bitcoin cash (BCH) dealing in the same month, with the plaintiffs condemning the company of tipping off insiders ahead of the official launch. As such, the cluster blames the firm for negligence & is seeking damages, the amount of which will be decided at trial.
As previously stated, San Francisco-based Coinbase first declared in August that it would shore up bitcoin cash – the latest crypto asset that was forked from the bitcoin blockchain in November. At that time, the exchange gave the statement that the new service would go live by 1st Jan 2018, after which shareholders would be competent to withdraw bitcoin cash.
When Coinbase launched BCH trading on 20th Dec 2017, BCH values spiked just prior to the declaration and allegation soon became visible on social media suggesting that workers of the firm might have tipped off others in advance. The company reacted to the declaration by announcing that it would carry out an inquiry that whether any staff members have violated its trading rules.
However, the plaintiffs claim that the firm has never disclosed the full results of its inquiry and that it has violated California’s Unfair Competition Law.
The complaint stated:
“When Coinbase’s clientele trades were finally executed, it was just after the insiders had driven up the value of BCH, and thus the remaining bitcoin clients only received their BCH at falsely inflated prices that had been manipulated well ahead of the fair market value of BCH at that time.”