• 396 days Could Crypto Overtake Traditional Investment?
  • 401 days Americans Still Quitting Jobs At Record Pace
  • 403 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 406 days Is The Dollar Too Strong?
  • 406 days Big Tech Disappoints Investors on Earnings Calls
  • 407 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 409 days China Is Quietly Trying To Distance Itself From Russia
  • 409 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 413 days Crypto Investors Won Big In 2021
  • 413 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 414 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 416 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 417 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 420 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 421 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 421 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 423 days Are NFTs About To Take Over Gaming?
  • 424 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 427 days What’s Causing Inflation In The United States?
  • 428 days Intel Joins Russian Exodus as Chip Shortage Digs In
Russia Considers Nationalizing Foreign Businesses

Russia Considers Nationalizing Foreign Businesses

The Russian government is reportedly…

Russian Default Looms Large, Visa Joins the Exodus

Russian Default Looms Large, Visa Joins the Exodus

Giant Visa and Mastercard have…

Biggest Job Gains in History, but It’s Not Enough

Biggest Job Gains in History, but It’s Not Enough

The U.S. economy added 467,000…

  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