Crypto Exchange Coinbase Hit With Two Class Action Lawsuits
Two federal class action lawsuits has been filed against crypto exchange Coinbase in two days, including an alleged insider trading during its Bitcoin Cash (BCH) launch last December.
In the first lawsuit, filed on March 1, the plaintiffs claim Coinbase tipped off its employees a month prior to the official launch of Bitcoin Cash on December 19, 2017. As such, the group accuses the exchange of negligence, and is seeking damages, the amount of which will be decided at trial.
The complaint was filed in the US District Court for the Northern District of California by lead plaintiff Jeffrey Berk on behalf of himself and a group of Coinbase customers.
According to the complaint, “a month after tipping off its own employees as to when it would commence fully supporting BCH, Coinbase suddenly announced that it was opening up its books to the buying and selling of BCH within minutes after its announcements. Unsurprisingly, those who had been tipped off, immediately swamped Coinbase and the GDAX with buy and sell orders, thinning the liquidity but obtaining BCH at fair prices. The market effect was to unfairly drive up the price of BCH for non-insider traders once BCH came on line on the Coinbase exchange.”
The plaintiffs are alleging that customers who wasn’t aware of Coinbase’s decision to begin supporting Bitcoin Cash got screwed over by those who were privy to that info ahead of the launch, causing them to unfairly lose money on their trades.
“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.”
The plaintiffs were represented by two attorneys from Green and Noblin P.C., and the Grant Law Firm. The lawsuit demands a jury trial and unspecified monetary damages for “all Coinbase customers who placed purchase, sale or trade orders with Coinbase during the period of December 19, 2017.”
The second lawsuit was by Timothy G. Faasse and Jeffrey Hansen on March 2. The plaintiffs accused Coinbase of “unlawful and unfair business practices” and violating California’s Unclaimed Property Law. They seek reimbursement of the funds, including those sent involving now-expired email addresses.
The lawsuit states: “Plaintiffs and the class were sent an email from Coinbase stating they had cryptocurrency, with a link to create a Coinbase account to redeem it. But until 2017, most people never heard of a “bitcoin” or cryptocurrency, so most of these emails were disregarded. And most of the cryptocurrency went unclaimed. But instead of notifying plaintiffs and the class they had unclaimed cryptocurrencies, Coinbase kept them.”
The plaintiffs argue that under, California state law, the funds should be held by the state as “unclaimed property,” which could give them and others the chance to reclaim it.
“Imagine writing a cashier’s check to a friend. The bank withdraws funds from your account, but your friend never cashes the check,” the complaint argues. “Does the bank get to keep the funds? The law clearly says ‘no.’ But this is exactly what has happened with cryptocurrencies sent through Coinbase.com, owned and operated by Coinbase, Inc.”
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