The largest US digital currency exchange faces new class action lawsuit over alleged insider trading of Bitcoin Cash, according to media reports.
Coinbase faced accusations that it had allowed insiders to profit from the roll-out of Bitcoin Cash on its platforms last December. A class action suit was filed by plaintiff Jeffrey Berk in March, accusing the company in negligence and seeking damages. The lawsuit was dismissed last month by US District Judge Vince Chhabria, from the Northern District of California, who questioned the legal basis for the claims.
According to industry website Coindesk, an amended version of the lawsuit has now been filed with the US District Court for the Northern District of California. The lawsuit provides further details on Coinbase’s alleged wrongdoings with regards to the Bitcoin Cash launch. The plaintiffs believe that the company “made false and deceptive statements” about its roll-out of the Bitcoin fork, that it caused a spike in the Bitcoin Cash price while at the same time depressing BTC and that traders who received insider information were able to buy and sell the token before other.
“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,” the plaintiffs said in the document, as quoted by Coindesk.
Coinbase now must respond to the allegations by December 20. The initial court hearing is cheduled for January 31.