Cryptocurrency exchange Coinbase sued for insider trading

Cryptocurrency exchange Coinbase sued for insider trading

A group of private cryptocurrency traders on Thursday filed [complaint, PDF] a class action lawsuit alleging that employees of the San Francisco based cryptocurrency exchange Coinbase [corporate website] engaged in insider trading of Bitcoin Cash.

The class action lawsuit was filed at a California district court by cryptocurrency trader Jeffery Berk on behalf of himself and other traders who claim to have suffered monetary damages as a result of the alleged insider trading at Coinbase.

In August Coinbase initially stated that it would not support Bitcoin Cash until January 2018. However, in December Coinbase made a surprise announcement that it had started to trade the cryptocurrency. Within minutes of Coinbase’s announcement, the price of Bitcoin Cash shot up nearly $1,000 and all further Bitcoin Cash trades were canceled that day.

Berk is alleging that he and everyone else who were not aware of Coinbase’s decision to begin supporting Bitcoin Cash were harmed by Coinbase employees who were privy to that information ahead of the announcement.

The lawsuit reads, “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.”

Coinbase has hired an external law firm to conduct an investigation into insider trading allegations. However, after three months of investigation, there has been no public announcement from the company.