Coinbase Hit with 2 Class Action Lawsuits

US cryptocurrency exchange Coinbase was hit with two class action lawsuits last week.

First Class Action Lawsuit

First of all, the exchange is accused of insider trading Bitcoin Cash and violation of the law on unclaimed property. According to the users of the exchange, during the period from 19 to 21 December, the administration of the exchange artificially inflated prices by trading, based on insider information. BCH rate sharply increased from $1865 to $4300.  This means that in just 48 hours the BCH exchange rate grew by 130%.

“This is a class action on behalf of all Coinbase customers who placed purchase, sale or trade orders with Coinbase or the GDAX in connection with Coinbase’s launch of BCH during the period of December 19, 2017 through and including December 21, 2017 and who suffered monetary loss as a result of Defendants’ wrongdoing”, stated in the Coinbase Class action lawsuit.

On the day of Bitcoin Cash’s launch at Coinbase, Brian Armstrong, CEO of Coinbase, published a post saying that Coinbase employees have to fulfill a number of requirements that relate to all trading activity on any exchange and prohibit them from disclosing non-public information.
However, in response to the allegations, he noted that insider trading, perhaps indeed was, but from outside. Armstrong added that this was only an isolated case with one of the employees. He promised that the exchange will take care of this incident.

Second Class Action Lawsuit

The second Coinbase class action lawsuit accuses the company of violating California law and unfair business practices.
According to the document, Coinbase users can send Bitcoin, Ethereum, Litecoin and Bitcoin Cash to external e-mail addresses that are not assigned to an existing wallet. This e-mail contains a link that allows the recipient to open an account on Coinbase and claim a cryptocurrency transfer. However, as the plaintiff argues, not every transfer was claimed, so the question is where are these funds at the moment.

“Imagine writing a cashier’s check to a friend. The bank withdraws funds from your account, but your friend never cashes the check. Does the bank get to keep the funds? The law clearly says no. But this is exactly what has happened with Cryptocurrencies sent through Coinbase.com, owned and operated by Coinbase, Inc.”.
According to Plaintiffs, Coinbase does not notify the senders that the funds were not in demand, and uses these funds for illicit enrichment.

In addition, Coinbase will give data on 13 thousand of its customers to Internal Revenue Service. Authorities suspect that some users have not paid taxes from cryptocurrency transactions in the amount of 20 thousand dollars.

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