Exchange

Modified Bitcoin Cash Insider Trading Lawsuit against Coinbase, Hearing on Jan. 31, 2019

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The lawsuit filed against a renowned crypto exchange platform and a wallet service provider Coinbase is back with some amendments in it. The lawsuit was filed by Jeffery Berk initially this year, and he will proceed to court on Jan. 31, 2019, as confirmed by the court documents submitted on 20 November.

Initial Rejection By the Judge :

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Berk had filed the lawsuit which alleged that the insider trading of Bitcoin Cash (BCH) has been carried out by Coinbase officials. And that they profited from the cryptocurrency exchange’s rollout of bitcoin cash last December.

However, the complaint by Berk was rejected by District Judge Vince Chhabria around a month ago, due to the failure to “describe the scope or content of Coinbase’s duty.” The Judge stated at that time it was unclear what Berk’s legal basis was, what he believed Coinbase should have done or how the rollout could have gone more smoothly. He expressed that Coinbase had “bungled” the BCH rollout, although.

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Details of the Lawsuit :

The modified version of the lawsuit indicates that Coinbase “made false and deceptive statements” regarding the rollout of the bitcoin fork. The document also claims that Coinbase promoted bitcoin cash’s price to increase at the same time decreasing the bitcoin’s price.

The complaint states, “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.”

Also, it adds, “The sudden launch (of BCH) was effectively part of an attack by Coinbase and (CEO Brian Armstrong) to depress the price of BTC and to inflate the price of BCH, to encourage more transactions and greater profitability for Coinbase.”

Besides, the amended version of the lawsuit also points out that exchange failed to obey the token listing standards on GDAX (now Coinbase Pro).

Here, Berk, the plaintiff wants damages and restitution and the costs spent because of the course of the lawsuit. With that, the largest crypto exchange in the US, Coinbase is expected to give an answer by Dec. 20.

Ruti Vora

Ruti regularly contributes in-depth news articles for leading cryptocurrencies. She contributes technical chart-based price updates and analysis pieces on world's leading digital currencies. She holds graduate degree in journalism.

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