The prominent cryptocurrency exchange, Coinbase is up against two new class-action lawsuits. The Coinbase class action suits accuse the company of both insider trading, and fraudulently keeping funds.
One suit, filed Thursday in federal court in San Francisco, claims Coinbase employees unfairly profited from the December listing of bitcoin cash. The price of bitcoin cash — which spun off from bitcoin in August — shot up almost $1,000 when Coinbase announced on Dec. 19 it would start trading in the digital currency. While the news came as a surprise to most people, the suit says employees knew about the listing ahead of time, as well as anyone they might have told, and those insiders profited unfairly when the price shot up. The complaint is embedded below for your convenience:
The suit alleges that when trading began, insiders swamped Coinbase’s system with buy and sell orders at “fair prices.” Coinbase had to suspend bitcoin cash trading until the next day to maintain liquidity.
“When Coinbase’s customers’ trades were finally executed, it was only after the insiders had driven up the price of bitcoin cash, and thus the remaining bitcoin customers only received their bitcoin cash at artificially inflated prices that had been manipulated well beyond the fair market value of bitcoin cash at that time,” the lawsuit claims.
At the time, Coinbase said it would conduct an investigation into whether any employees acted improperly. The lawsuit says the company never revealed the results of that investigation.
Bitcoin cash, the fourth-largest cryptocurrency by market cap, was trading at $1,253 on Monday, according to CoinMarketCap.com, down from its peak above $4,000 on Dec. 20. Bitcoin BTCUSD, -4.03% was trading at $11,319 Monday.
In the second suit, filed Friday, also in federal court in San Francisco, two men say they were unable to redeem bitcoin that had been transferred to them, and accuse Coinbase of fraudulently keeping funds that non-customers were unable to access. A copy of this complaint is also embedded below:
They claim that when Coinbase members send cryptocurrency to a non-member, they receive an email that gives them no alternative but to open a Coinbase account. The pair claim thousands of people have had cryptocurrencies sent to them in that way, but have been unable to redeem the funds they are owed.
Coinbase did not immediately comment on either lawsuit.
It’s been a rough few weeks for Coinbase. Last Tuesday, the exchange said it was turning over data on 13,000 users to the Internal Revenue Service, after the IRS demanded records to see if bitcoin traders were evading taxes. In February, some Coinbase customers were overcharged for crypto purchases due to a system glitch that Coinbase attributed to changes in how credit-card issuers were processing cryptocurrency charges and fees. Visa Inc. V, -0.12% later said Coinbase was not at fault.
Editor’s note on the Coinbase Class Action Lawsuits:
This piece is written about the recent Coinbase Class Action Lawsuits. If you are considered eligible to be among the class of consumers described in the class action, you may eventually be able to participate in receiving any compensation the court may award.
If you believe Coinbase’s actions have affected you, please don’t hesitate to reach out to us. We’d be happy to help you take a step in the right direction to fight this issue and join the class action. Please send an email to Outreach@ConsiderTheConsumer.com, find us on Twitter or Facebook, or even connect with us directly on our website! We look forward to hearing from you all.