Leading US-based cryptocurrency exchange, Coinbase must face a negligence lawsuit for allegedly mishandling the launch of Bitcoin Cash (BCH) for trading on its platform, dubbed as an apparent “incompetence born of haste,” according to a judge.
Coinbase Facing a Lawsuit Over BCH Launch?
According to U.S. District Judge in San Francisco, Vince Chhabria, Coinbase must face a lawsuit for negligently botching the launch of Bitcoin Cash (BCH) for trading on its platform. Per the reports, the launch was carried out with “incompetence born of haste,” and the case shouldn’t go through arbitration but rather the claimants can move forward with a regular lawsuit.
The judge also holds that the claims contain “plausible account that Coinbase breached its duty to maintain a functional market.”
The ruling refers to the fact that back in December 2017, Coinbase briefly enabled orders to be posted in USD on its platform for some of its more sophisticated traders but suspended it a couple of minutes as it showcased serious volatility.
As it’s almost always the case when a digital currency is listed on a major exchange, BCH surged in value hours before Coinbase had it posted on its website that it would allow traders to operate with it. Hence, the community started suspecting potential insider trading.
According to the judge, the decision to halt trading that quickly was an indication of dysfunction. Moreover, the buyers who initiated the claim alleged that there was a plausible motive. It was supposedly because the Chicago Mercantile Exchange (CME) opened trading in Bitcoin futures on the following days, hence potentially explaining the why their orders were filled with high-priced limit orders, according to the judge.
Sellers, on the other hand, are claiming that they lost an opportunity to sell at artificially high prices which, in turn, were caused by the exchange’s decision to negligently halt trading.
As such, Coinbase is facing claims for unfair competition and fraud.
In July last year, the exchange reportedly conducted an internal investigation on the matter, coming to the conclusion that no insider trading took place.
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