Coinbase Faces Negligence Charges Over Botched Bitcoin Cash Launch
A U.S. judge has ruled that Coinbase must face negligence charges over its actions around the launch of Bitcoin Cash trading. However, the majority of claims against the company, including those of fraud and unfair competition, were thrown out.
“Incompetence Born Of Haste”
Judge Vince Chhabria decided that the refiled complaint laid out a “plausible account that Coinbase breached its duty to maintain a functional market,” and its actions constituted an apparent “incompetence born of haste.”
Coinbase briefly enabled US Dollar orders for BCH in December 2017, but suspended them after just two minutes, citing significant volatility. Prices pumped in the hours leading up to the announcement that Bitcoin Cash would be added. Observers suggested that this was evidence of insider trading.
Coinbase had originally faced criticism in August of 2017 for its decision not to support Bitcoin Cash, following its hard-fork from Bitcoin.
Buyers Allege Plausible Motive
BCash buyers claimed that Coinbase could have announced the launch of trading on the token well in advance. This could have averted the price spike.
However, they allege that the launch was rushed due to the Chicago Mercantile Exchange opening Bitcoin futures trading the previous day. The judge said that these circumstances could explain why buyers’ orders were filled with high-priced limit orders.
BCH buyers who made claims will now be able to move forward with the suit. The judge rejected calls for these claims to be dealt with in arbitration.
Sellers Don’t Have A Valid Case
BCash sellers, however, were not so fortunate. Their claim, that they lost an opportunity to sell at artificially high prices, was dismissed. Coinbase’s decision to halt trading after two minutes was an indication of dysfunction, according to the judge, but was not negligent.
The judge also dismissed allegations of fraud and unfair competition.
San Francisco-based Coinbase has seen a sharp increase in new business recently, adding 5 million new users over the course of the past ten months, according to reports.
Do you think Coinbase will come out clean in this latest BCash launch row? Let us know your thoughts in the comments below!
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Emilio Janus, Khareem Sudlow