Leading US-based cryptocurrency exchange Coinbase must face a negligence lawsuit for allegedly mishandling the launch of Bitcoin Cash (BCH) on its platform, an apparent “incompetence born of haste,” according to a judge.
Coinbase Faces Lawsuit Over BCH Launch?
According to a 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 report, the launch was carried out with “incompetence born of haste,” and rather than enter arbitration, the claimants can move forward with a normal lawsuit.
The judge also held that the claims contained “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 USD orders to be posted on its platform for some of its more sophisticated traders but suspended them after a couple of minutes as the market showcased serious volatility.
As is almost always the case when a digital currency is listed on a major exchange, BCH surged in value hours before Coinbase announced on its website that it would allow traders to access BCH. 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 suggested a plausible motive. The Chicago Mercantile Exchange (CME) opened trading of Bitcoin futures on the following days, potentially explaining why their orders were filled with high-priced limit orders, according to the judge.
Sellers, on the other hand, claim that they lost an opportunity to sell at artificially high prices caused by the exchange’s decision to negligently halt trading.
As such, Coinbase is facing claims of unfair competition and fraud.
In July of last year, the exchange reportedly conducted an internal investigation on the matter, coming to the conclusion that no insider trading had taken place.