Users of coinbase crypto platform have filed an official lawsuit regarding the company’s alleged “insider trading” of Bitcoin Cash. There is no doubt coinbase is one of the largest cryptocurrency exchanges in the world, but it has become a target of lawsuits as well nowadays. Whether or not these claims are valid is yet to be known.
It is not the first time coinbase is facing a lawsuit; the prior legal action was part of its continuing row with the IRS, which in the end won for the government agency, although in a limited fashion.
However, the latest lawsuit might be so damaging to the company. Allegations about insider trading linked with the listing of Bitcoin Cash is not a thing to be rushed.
The complaint against Coinbase alleges that insiders working at Coinbase had prior knowledge that Bitcoin Cash would be listed, so they made purchases accordingly before the information was public.
It can be seen from looking at the price action of Bitcoin Cash on other exchanges before the Coinbase listing that there was some initial buying, probably by the hands of insiders at Coinbase. The class of this action lawsuit cites unfair competition law of California. This is the closest complaint possible to a formal insider trading complaint, as BCH, along with all other cryptocurrencies, are not regulated as securities.
Bitcoin cash price surged by more than 200 percent immediately after it was listed on Coinbase on December 19, showing that some insiders had that knowledge and knew that it would rise, so they availed themselves for trading. Coinbase was forced to freeze trading since it could not handle the volume. At the same time, buyers had to lock in the buy prices which were well above the fair amount of the coin due to manipulation.
It is always known that whenever a coin is added to Coinbase, it surges in value since Coinbase is a fiat exchange and is more accessible to the masses than any other transactions. Nevertheless, the BCH saw a massive surge in both volume and price that cannot feasibly be attributed to buying because of the hype.