Cryptocurrency exchange Coinbase has been hit with two class action lawsuits in recent days, one for insider trading and another for allegedly stealing customers' coins. This comes at a difficult time for Coinbase as they continue to face system stability issues and reports of overcharging.
The first lawsuit was filed in San Francisco federal court and surrounds the launch of Bitcoin Cash, BCH, on the Coinbase platform. Shortly after trading opened, the price of BCH skyrocketed to massively inflated levels. When rumors emerged that Coinbase employees were tipped off about the launch, suspicions of insider trading immediately began to spread. Jeffrey Berk is representing all customers that placed buy, sell or trade orders for BCH between December 19 and December 21, 2017. The complaint alleges:
“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.”
Company CEO Brian Armstrong quickly announced an internal investigation but has yet to provide details of its results.
The second lawsuit was also filed in San Francisco and claims that Coinbase failed to notify customers of unclaimed balances back in 2013. The plaintiffs argue that rather than turning these coins over to authorities, Coinbase kept them. The complaint states:
“Defendant kept, and continues to keep, unredeemed cryptocurrencies sent via email through Coinbase.com.”
This was caused by Coinbase's operating procedure surrounding sending coins to non-members in certain scenarios. The two men filing the suit allege they received reminders of an unclaimed Bitcoin balance but were unable to claim the coins since the email link had expired.