Lawsuit Against Coinbase to Details BCH Insider Trading

The plaintiffs argue that the exchange intentionally created the conditions for BCH pumps
22 November 2018   1385

On Tuesday, November 20, a supplemented class action was filed with the federal district court of the Northern District of California against the largest US cryptocurrency company Coinbase, which contains data on the “false” statements of the latter when listing Bitcoin Cash in December 2017 and other details of probable insider trading, reported by CoinDesk.

The plaintiffs argue that the exchange intentionally created the conditions for Bitcoin Cash's pumps and allowed a limited number of traders to sell at the best price.

As a consequence of this scheme, the Individual Defendants and Coinbase enabled Coinbase to earn significant fees from the trades of its customers, from which Coinbase earned a spread over an inflated price for BCH, and to avoid a ‘run’ on the Company by sellers anxious to take advantage of the inflated price, by closing down trading within minutes of the Launch to all except certain insiders who were positioned to and did sell BCH at inflated prices during the Launch.
 

Lawsuit

Recall, against the background of listing on Coinbase, the BCH rate in just 48 hours took off by 130% - from $ 1,865 to $ 4,300. Trading was suspended already four minutes after the start.

Then, a Bitcoin enthusiast Albert Renshaw published a deleted correspondence on /r/Coinbase the day before the BCH listing, in which an unknown user mukiva2 warned traders about the upcoming event, citing a source in the company.

At the same time, the internal investigation of Coinbase found no evidence of insider trading, and at the end of October the Federal District Court of the Northern District of California rejected one of the lawsuits against the company [of March 2] due to the absence of legal grounds for its consideration.

US Crypto Companies to Support TON in Case With SEC

The Blockchain Association said Telegram taken sufficient measures to ensure that the Gram token offer met SEC requirements
23 January 2020   437

The Blockchain Association, which combines companies such as Coinbase, Circle, 0x and Ripple, issued an expert opinion as part of the ongoing proceedings of the US Securities and Exchange Commission (SEC) with Telegram.

Previously, the Digital Commerce Chamber launched a similar initiative. The blockchain association, however, was more straightforward and stated that Telegram had taken sufficient measures to ensure that the Gram token offer met SEC requirements. According to members of the organization, the actions of the SEC can damage not only Telegram, but the market as a whole.

The Court should not block a long-planned, highly anticipated product launch by interfering with a contract between sophisticated private parties. Doing so would needlessly harm the investors that securities laws were designed to protect.

 

The Blockchain Association

The Blockchain Association notes that for many years it has not been possible for SEC to obtain clear and unambiguous guidance for conducting activities in the cryptocurrency space, while the claims of the regulator make the current situation even more ambiguous. 

The SEC’s lawsuit also raises novel questions regarding whether companies are forbidden from raising funds from sophisticated U.S. investors, under well-established regulatory provisions, to build blockchain networks.

 

The Blockchain Association

They cite examples of startups TurnKey Jet and Pocketful of Quarters, in respect of which the regulator recommended not to apply legal measures, adding that such litigations inevitably involve high costs and do not guarantee industry participants that they will not be prosecuted in the future.

Telegram discussed its plans with SEC staff for a year and a half, provided copious information and responded to limited feedback by adjusting the design of its transaction. Yet, at the end, the SEC has sued, and the SEC’s briefs thus far say nothing about the substance of those discussions. 

 

The Blockchain Association

In conclusion, the group asks the court to “reject the SEC’s arguments that the not-yet-in-existence Grams were securities at the time of the Purchase Agreements.”