California District Court: Coinbase Facing New Complaint Over Alleged Insider Trading

 

The US-based exchange giant Coinbase has been hit with the new amended complaint over alleged insider trading during the launch of Bitcoin Cash (BCH) on its exchange.

Image result for coinbase logoIn March this year, the news broke about Coinbase facing a lawsuit filed by a group of investors that placed trading orders on Coinbase or its order book trading platform in December 2017. The exchange is accused of tipping off insiders ahead of the formal launch of the BCH, thus violating California’s Unfair Competition Law.

“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,” notes the original complaint filed on January 3rd.

However, the initial complaint was temporarily dismissed by the federal judge in October.

In an amended version of the lawsuit, which was filed before the U.S. District Court for the Northern District of California on Nov. 20, Coinbase is again accused of providing false and deceptive statements about its rollout of the bitcoin fork. Moreover, the complain outlines that rollout failed to abide by the token listing standards on Coinbase trading platform.

“As a consequence of this scheme, the Individual Defendants and Coinbase enabled Coinbase to earn significant fees from the trades of its customers, from which Coinbase earned a spread over an inflated price for BCH, and to avoid a ‘run’ on the Company by sellers anxious to take advantage of the inflated price, by closing down trading within minutes of the Launch to all except certain insiders who were positioned to and did sell BCH at inflated prices during the Launch.”

Coinbase has been given a deadline until Dec. 20th to provide a reply to this complaint while the hearing has been scheduled for Jan. 31st, 2019.