Coinbase officially accused of insider trading
On the 1st of March the cryptocurrency exchange Coinbase has been hit by a class action lawsuit over alleged insider trading, for the Bitcoin Cash (BCH) launch last December.
At the end of December last year, Bitcoin Cash (BCH) has been officially listed on the exchange, but many people lost a lot due to alleged insider trading. Around 1 hour prior to the official statement for the listing, the price of Bitcoin Cash (BCH) increased with over 50%. Immediately after that social media channels has been swamped with accusations that Coinbase tipped of employees and traders, which accumulated BCH prior to the official listing
The company responded to the rumours by announcing the beginning of an inside investigation into the matter. The company stated that it has a very strict insider trading rules and will conduct a thorough check whether any of its staff members may have violated these rules.
The 18 page class suit accuses the exchange that the full results of the investigation has never been revealed and that the firm violated California’s Unfair Competition Law. The lawsuit demands a jury trial against Coinbase Inc., GDAX, David Farmer, and Brian Armstrong. It further explains:
Unsurprisingly, those who had been tipped off, immediately swamped Coinbase and the GDAX with buy and sell orders, thinning the liquidity but obtaining BCH at fair prices. The market effect was to unfairly drive up the price of BCH for non-insider traders once BCH came online on the Coinbase exchange.
The unsatisfied customers also explain:
When Coinbase’s customers’ trades were finally executed, it was only after the insiders had driven up the price of BCH, and thus the remaining bitcoin customers only received their BCH at artificially inflated prices that had been manipulated well beyond the fair market value of BCH at that time.
The full law suit can be found here.