As the saying goes, tall trees catch much wind,’ and for Coinbase, especially this week, this seems to be true. The seventh biggest exchange through transaction volume, as shown on Coinmarketcap is also the biggest exchange in the US. So, being at the top, it has caught a lot of flak and made a lot of news this week.
Coinbase is an important junction in the cryptocurrency ecosystem, and it has shown on a number of occasions that its influence and direction can shape the entire marketplace globally.
Its decision to integrate SegWit recently saw an upswing in those types of transactions, but on the flipside, its decision to offer Bitcoin Cash also pumped that market- in what is being called insider trading by some. Even rumors about Ripple integration have had its effect on the coin.
In the news this week alone, Coinbase has been sued twice, once for the insider trading allegations, and once for allegations that it “kept” funds that its users sent via email, but which recipients never claimed. It has also been linked to Ripple, again, and has had to deny that- which has caused swings in the Ripple price. Finally, it is still forging ahead as a pioneering crypto ecosystem with its latest offering an index fund.
Laying out lawsuits
Coinbase is no stranger to lawsuits and legal battles, having faced a few days in court before, as well as having fended off the IRS in their quest to obtain users’ trading information through the exchange. But fresh allegations have emerged, dating back to their decision to integrate Bitcoin Cash onto the platform.
At the end of December last year, Coinbase decided to add Bitcoin Cash to their offerings. This saw the price of the forked currency soar, while Bitcoin started to drop off.
Immediately, accusations flew that Insider trading was happening, despite the company making it clear that employees had been restricted from trading BCH on the site for a number of weeks prior to the announcement.
Now, a class action lawsuit has emerged from one of the Coinbase users based in Arizona, Jeffrey Berk. The plaintiff accuses Coinbase of “artificially inflated prices” by means of disclosing buy and sell orders moments after Coinbase launched BCH support. CEO Brian Armstrong said at the time of first allegations, in a blog post: “If we find evidence of any employee or contractor violating our policies, directly or indirectly, I will not hesitate to terminate the employee immediately.”
Unfair business practices
This lawsuit comes months after the allegations were laid, but is put forward: “on behalf of all Coinbase customers who placed purchase, sale or trade orders with Coinbase… during the period of Dec. 19, 2017 through and including Dec. 21, 2017... and who suffered monetary loss as a result of defendants’ wrongdoing.”
Additionally, while fielding this lawsuit, Coinbase has also been accused of keeping hold of funds sent by email which were never claimed by their recipients. It is another class action lawsuit that the exchange will have to handle delicately as it looks to keep its reputation intact in a space where there are a number of scam and badly run cryptocurrency services.
To lawsuit has been brought forward to the District Court for the Northern District of California by Restis Law Firm on behalf of two Coinbase users seeks reimbursement of the funds, including those sent involving now-expired email addresses. It is claimed that Bitcoin, which was emailed to people prior to the mainstream acceptance and understanding of digital currencies went unclaimed in many emails, and, instead of returning the coins, Coinbase simply kept hold of them. This falls under the gambit of unfair business practices being leveled at the exchange.
Both of these lawsuits, of course, do not paint Coinbase in the best of lights, despite them only being allegations currently. The negative press associated with bad practices and insider trading can be damaging, and for a company like Coinbase, it is not what is needed as they aim to be a positive precedent setting crypto solution.
It is negative news that is being picked up by some influencers in the community as Tone Vays, Host of CryptoScam podcast, points out how much of their energy and funds are going to just keep afloat with all the legal battles.