Coinbase Faces Class Action Lawsuit Over BCH Trading Allegations

Background of the Lawsuit

The class action lawsuit against Coinbase, initiated by Jeffery Berk in 2017, revolves around allegations of insider trading associated with the launch of Bitcoin Cash (BCH). Berk initially sought to hold the cryptocurrency exchange accountable for purported misconduct among its officials during the contentious launch period.

The October Hearing Fiasco

Originally set for trial in October 2019, the lawsuit met an untimely demise when District Judge Vince Chhabria dismissed Berk’s claims. The judge criticized the lack of detail regarding Coinbase’s responsibilities, stating that Berk failed to adequately articulate the exchange’s duties in relation to the alleged insider trading.

Amended Claims and New Allegations

Following the dismissal, Berk has resubmitted an amended lawsuit that narrows its focus. This new version accuses Coinbase of breaching its own trading protocols related to the trade of BCH. The allegations suggest a deliberate action to manipulate market conditions by the company’s leadership, including CEO Brian Armstrong. Berk asserts that the abrupt launch of BCH was a ploy to depress Bitcoin (BTC) prices while artificially inflating BCH values, which would ultimately boost Coinbase’s transaction volumes and revenue.

Coinbase’s Response Timeline

According to court documents, Coinbase is required to respond to the amended lawsuit by December 20. This response will precede a scheduled hearing on January 31, 2020. As the date approaches, the pressure mounts on Coinbase to address the rising tide of allegations and restore its reputation in the volatile cryptocurrency market.

Coinbase’s Internal Investigations

In light of these serious allegations, Coinbase had previously conducted an internal investigation into claims of insider trading. The findings, released in July, concluded that no insider trading occurred, which might play a key role in their defense against Berk’s amended claims. However, the controversies around BCH further complicate the coin’s standing and raise questions about the company’s operational conduct, especially after the disruptive hard fork event on November 15 that led to a major split in the BCH blockchain.

Conclusion

As the situation develops, both Coinbase and the broader crypto community will be watching closely. With the volatility of BCH and its ongoing saga, not to mention the scrutiny surrounding Coinbase, the outcome of the class action lawsuit has the potential to shape the future of cryptocurrency exchanges and their market practices.