• 8 hours The Surprising Businesses Deemed “Essential” During The Coronavirus Lockdown
  • 12 hours Priceless Van Gogh "Spring Garden" Painting Stolen
  • 14 hours Oil Falls To $20 For First Time In Nearly Two Decades
  • 16 hours COVID-19 Could Be The End Of U.S. Coal
  • 1 day How Much Does Your Social Security Number Cost? $4 On The Dark Web
  • 3 days Silver Stocks Have Been Decimated In The Coronavirus Sell-Off
  • 3 days How Blockchain Tech Could Make Mergers And Acquisitions More Efficient
  • 4 days America’s Shortage Of This Metal Keeps Trump Up At Night
  • 4 days Bidet Bonanza: Defying The Toilet Paper Shortage
  • 5 days U.S. Auto Sales Fall By 75%
  • 5 days Violating Quarantine? Big Brother Is Watching
  • 6 days Does Gold Still Have Some Room To Run?
  • 6 days Major Acquisition Gives The World’s First Green Ride-Share Another Edge
  • 6 days U.S. Pushes For Digital Currency For Immediate Stimulus
  • 7 days The Impossible Challenges Created By Growing Population
  • 7 days Gold Skyrockets After Fed Pledges "Unlimited" Cash To Boost Economy
  • 7 days World’s Richest Lose $1 Trillion In Stock Market Rout
  • 8 days Gas Stations Shut Down In Venezuela As Coronavirus Crisis Intensifies
  • 8 days The Best And Worse Case Scenario For The U.S. Stock Market
  • 8 days 3 Industries Soaring During The Coronavirus Crisis
U.S. Auto Sales Fall By 75%

U.S. Auto Sales Fall By 75%

The economic slowdown is beginning…

  1. Home
  2. News
  3. Breaking News

U.S. Crypto Exchange Faces Insider Trading Charges

Lawsuit

Only minutes after Coinbase made the sudden announcement that it would start trading Bitcoin Cash (BCH) on 19 December 2017. The price of the coin spiked to over $8,000 and then trading was abruptly cancelled.

Now it’s facing a class action lawsuit over insider trading that alleges staff tip-offs ahead of the Bitcoin Cash announcement. 

Berk v. Coinbase was filed in the Northern District of California last Thursday and claims that Coinbase insiders had advance knowledge of the move to start trading BCH in the Bitcoin fork before the public knew.

The lawsuit also alleges that “in response to a disclosure that Bitcoin would experience a ‘hard fork’, which would create a new cryptocurrency called BCH, Coinbase initially announced that it was unprepared to and thus would not support the new currency. In mid to late July 2017, it further told customers that if they intended to participate in the new currency, they should withdraw their Bitcoins from Coinbase, resulting in a deluge of withdrawals.”

On 19 December 2017, “a month after tipping off its own employees as to when it would commence fully supporting BCH, Coinbase suddenly announced that it was opening up its books to buying and selling of BCH within minutes after its announcements.”

The result, according to Berk, was that those who had been tipped off swamped Coinbase, “thinning the liquidity but obtaining BCH at fair prices.” That drove up the price of BCH for non-insider traders once it came on the Coinbase exchange. Related: How Are Corporations Using Their Tax Savings?

Just two minutes and 40 seconds after Coinbase enabled full BCH trading, over 4,443 orders were placed and 3,461 orders matched, worth $15.5 million in trading. The price of BCH jumped 200 percent to over $8,499.

(Click to enlarge)

Source: Bitcoin.com

But non-insider customers of Coinbase had yet another surprise coming to them. Within a matter of minutes, Coinbase stopped the trading in BCH and cancelled outstanding orders claiming lack of liquidity—but it wasn’t until after insiders had had time to sell their shares, reads the lawsuit. This entire process was allegedly repeated during the next trading day.

Berk is demanding a jury trial for losses incurred on behalf of himself and other Coinbase customers.

At the time, on 19 December, Coinbase founder Brian Armstrong responded to insider trading accusations, saying that company has had internal policies in place well before the launch of BCH and all employees were prohibited from trading and talking with outsiders about the launch.

The lawsuit comes as Coinbase tries to dispel rumors that it may be adding another cryptocurrency to its trading platform: Ripple (XRP) after speculation went viral.  

By David Craggen for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment