Bitcoin Forum

Coinbase User Files Class Action Against Company, Claims Insider BCH Trading

Coinbase, a major US-based cryptocurrency exchange and wallet platform, faces a class action lawsuit claiming that its employees and other insiders benefited from trading on non-public information that the exchange planned to introduce Bitcoin Cash (BCH) support last December, The Recorder Law reported on Friday, March 2.

The complaint was filed by Coinbase user and Arizona citizen Jeffrey Berk, represented by two law firms, in the US District Court for the Northern District of California on Thursday, March 1.

The introduction to the class action complaint brought against Coinbase explains that it is being made:

“on behalf of all Coinbase customers who placed purchase, sale or trade orders with Coinbase… during the period of December 19, 2017 through and including December 21, 2017... and who suffered monetary loss as a result of Defendants’ wrongdoing.”

In the lawsuit, the plaintiff accuses Coinbase of “artificially inflated prices” by means of disclosing buy and sell orders moments after Coinbase launched BCH support on Dec. 19, 2017. The move may have caused the price of the cryptocurrency to soar by over 130 percent — from $1,865 on Dec. 18 it reached as high as $4,300 by Feb. 20, according to data from CoinMarketCap.

Read more https://cointelegraph.com/news/coinbase-user-files-class-action-against-company-claims-insider-bch-trading

Can you have insider trading action in an unregulated product? It is not clear which regulator - the SEC, CFTC or any of the other regulatory bodies would oversee crypto trading. Coinbase has also set up its internal review team to check whether there was any insider trading during the listing of Bitcoin Cash. But when there are no rules on crypto, how would you prosecute those who traded on insider information?

Agree. As fraudulent as "Insider Trading" but I don't think its applicable to crypto because is one market wherein there are no single authority to overlook everything. Not even SEC or CFTC has the power to check unless they really need to step in. However, this is good ole US of A, not China wherein the government will do everything to "protect its citizens against fraud in the crypto world. I don't know, but this lawsuit will end up nothing in my view.

The lack of regulation is one of the reasons why exchanges are sprouting like mushrooms everywhere. The system is very vulnerable unlike traditional exchanges where at least there is an entity looking over the exchanges' shoulder. But this person's claim may progress depending on how the lawyers are able to wring whatever the heck they can get from the existing laws governing such exchanges and the transactions that they do. I hope something good comes out of this that'll benefit us regular folks who would like to be a part of the blockchain revolution.

Unregulated doesn't mean everything is allowed. I think common laws against fraudulent behavior are still applicable in this case even if crypto is not overseen by regulatory bodies like SEC, CFTC, or any other such body. Also, I'm not quite sure whether it is not as unregulated as many come to think here. I clearly remember CFTC making a statement about cryptocurrencies to be considered commodities for trading purposes. You can find this statement on their site.