Coinbase Has to Face Negligence Lawsuit Over Launch of Bitcoin Cash
As per the latest reports, Coinbase Inc. will have to face a lawsuit for negligence over the unveiling of Bitcoin Cash (BCH). According to the ruling by Vince Chhabria, United States District Judge of Northern District of California, the cryptocurrency exchange exhibited ‘incompetence born of haste’ during the said launch back in the year 2017.
The judge further freed the San Francisco-based crypto exchange from the charges of fraud and unjust competition. However, he found the exchange to be guilty of negligence. The judge also rejected the argument to handle the lawsuit in mediation. Apart from that, Chhabria’s ruling has allowed the buyers of BCH, not the sellers, to move ahead with the case.
As per Chhabria, the refiled complaint brought forward a reasonable account that the exchange did infringe its duty of maintaining a functional market. The judge said that the complaint failed to sufficiently clarify how the launch carried out market manipulation for BCH or BTC even if it’s assumed that BCH is a commodity that’s subject to the Commodities Exchange Act. It also doesn’t coherently or plausibly explain the price manipulation motive of Armstrong and Coinbase, he added.
In December month of 2017, Coinbase had introduced BCH trading. Due to suspicious activity as well as high volatility, the exchange had to suspend the trading in merely 2 minutes of the launch. And that’s not all. The prices of Bitcoin Cash had noted a surge several hours before the listing announcement made by Coinbase, earning the exchange another accusation of insider trading.
The judge further highlighted that the exchange’s decision to stop trading indicated dysfunction. BCH buyers have also argued that the exchange could have declared their trading launch beforehand to avoid the price spike. After all, it was the buyers who got primarily affected by the price inflation. Furthermore, the buyers’ alleged a reasonable motive: a rush to the launch. That’s because bitcoin futures trading had already opened on the Chicago Mercantile Exchange a day ago. These circumstances may describe the reason why the buyers’ orders had been packed with high-price, the judge remarked.
For those who are unaware, Bitcoin Cash is a Bitcoin spinoff created in 2017. A trader called Jeffery Berk has filed the lawsuit against Coinbase.