Coinbase did not commit fraud during its failed launch of bitcoin cash (BCH) in 2017. Judge Vince Chhabria of the Northern District of California (San Francisco) passed this judgment on August 6. He issued a court order that dismissed all claims that Coinbase had acted fraudulently after stopping BCH trading after two minutes.
Chhabria’s ruling is the most recent development in a prolonged lawsuit that a trader by name Jeffery Berk filed in early March last year. According to him, Coinbase’s employees and other insiders gained from trading on non-public information that the exchange sought to list BCH.
Reportedly, Berk made this filing on behalf of all Coinbase customers who placed purchase, sale, or trade orders with Coinbase from December 19 to 21 based on the listing news. At this point, BCH was only four months old and leading exchanges had started adding support for the coin.
Initially, Coinbase listed the coin on its platform. As a result, the coin’s price surged significantly. However, Coinbase halted its trading depriving traders of the chance to sell at higher prices.
Complaint Failed to Explain Coinbase’s Motive for Manipulating BCH’s Price
Dismissing the claims of insider trading, Chhabria noted,
The plaintiffs identify three potential laws for the ‘unlawful’ prong: the Commodities Exchange Act, the FinCEN rules, and New York state regulations,
Even assuming Bitcoin Cash is a commodity subject to the Commodities Exchange Act, the complaint does not sufficiently explain how the launch manipulated the market for Bitcoin Cash or for Bitcoin. Nor does it plausibly or coherently describe Coinbase and Armstrong’s motive to manipulate the prices.
Judge Grants Motion to Dismiss the Fraud Claims
Following Chhabria’s judgment, Coinbase will now move forward based on a negligence lawsuit. According to the judge, the BCH launch was implemented very fast. Consequently, it roused problems from the very beginning.
He went on to state that,
The motion to dismiss the fraud claims is granted. The plaintiffs have not particularly pleaded their reliance on Coinbase’s allegedly fraudulent statements. Moreover, while the factual allegations paint a compelling picture of an incompetent launch by Coinbase, the complaint does not outline a coherent account of fraud by Coinbase, Armstrong, and Farmer.
Also, this ruling freed Coinbase’s CEO, Brian Armstrong, and head of product, David Farmer from fraud charges.
This news comes after Coinbase unveiled that it seeks to list eight new altcoins on its platform. According to the exchange, this move aims to expand the exchange’s market access. The exchange is assessing the viability of listing ALGO, ATOM, DASH, DCR, MATIC, ONE, ONT, and WAVES.
Do you think Coinbase’s victory in the BCH case will help increase the exchange trading volume? Let us know in the comments below.