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The plaintiff has charged Coinbase for making false and deceptive statements on the rollout of Bitcoin Cash last year after the Bitcoin hard fork.
According to the latest filing on November 20, cryptocurrency exchange Coinbase is facing a new class-action lawsuit for alleged insider trading of Bitcoin Cash. The lawsuit dates back to last year’s roll-out of Bitcoin Cash by Coinbase after the Bitcoin hard fork. According to the new documents, the proceedings of the case will start on Jan. 31 2019, in the U.S. District Court for the Northern District of California.
Coinbase previously faced charges of BCH insider trading wherein Jeffery Berk filed a lawsuit against Coinbase. However, the Berk faced a setback when District Judge Vince Chhabria ruled out Berk’s claims due to failure to “describe the scope or content of Coinbase’s duty.”
The document shows the amended version of the lawsuit wherein the plaintiff charges Coinbase of making deceptive statements. The plaintiff claims that this caused the BCH price to rise while simultaneously suppressing Bitcoin price. Further, it notes that Coinbase insiders who knew that the exchange would list BCH, traded the token before the customers.
The filing reads:
“The sudden launch (of BCH) was effectively part of an attack by Coinbase and (CEO Brian Armstrong) to depress the price of BTC and to inflate the price of BCH, to encourage more transactions and greater profitability for Coinbase.
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.”
Moreover, the complainant in the amended lawsuit notes that the BCH rollout by Coinbase failed to abide by the token listing standards on Coinbase Pro (earlier GDAX). Also, Coinbase claimed that it would inform investors priorly before allowing the Bitcoin Cash withdrawals. However, the filing claims that Coinbase allowed withdrawals even before warning its customers.
The plaintiffs further allege that at the time Bitcoin Cash was listed, only buying orders were available on the platform which caused the BCH price to inflate. The plaintiffs are now seeking damages for the same. The costs incurred and the amount shall be determined at the time of trial.
Coinbase is asked to provide a response on the same by December 20, next month. As said earlier the hearing is likely to take place by the end of January 2019.