Coinbase accused of cheating consumers in more ways than one
Coinbase Inc. was slapped with a pair of lawsuits by disgruntled consumers, one alleging insider trading by employees at the giant digital currency exchange and the other accusing the company of failing to deliver cryptocurrencies to people who didn’t have accounts.
The class-action suits come as Coinbase and other crypto startups are beefing up their staffs with regulatory experts to legitimize themselves as they prepare for government authorities to impose stricter rules.
The first of the complaints filed in San Francisco federal court centers on Coinbase’s announcement in December that it would enable purchases of the bitcoin spinoff known as Bitcoin Cash. The customer who sued alleges that employees were tipped off a month in advance, allowing them to instantly swamp Coinbase with buy and sell orders and leaving other traders at a great disadvantage.
Coinbase Chief Executive Officer Brian Armstrong said at the time that the company would investigate an increase in the price of bitcoin cash in the hours before its Dec. 19 announcement and that any employee or contractor found to have violated internal policies would be terminated.
“To date, neither Armstrong nor the company has disclosed the result of its purported investigation,” according to the March 1 lawsuit.
In the other suit, two men claim that they were unable to redeem bitcoin that had been transferred to them through Coinbase via their email addresses in 2013. They allege that when they got reminder notices in February, they tried to recover the bitcoin only to discover that the links provided by Coinbase were broken. They accused the company of keeping their funds and say they want to represent “thousands” of other people in the same position.
Coinbase said it doesn’t comment on pending litigation.
“Our priority has always been, and remains, maintaining our customers’ trust,” the company said in a statement. “We go to great lengths to provide comprehensive information needed to make investment decisions and to safeguard the integrity of our platform, and we hold ourselves to the highest standards of conduct.”
The cases are Berk v. Coinbase Inc., 4:18-cv-01364, and Faasse v. Coinbase Inc., 4:18-cv-01382, U.S. District Court, Northern District of California (Oakland).