One of the largest cryptocurrency exchanges, Coinbase, is accused of artificially inflating the rate of cryptocurrency, which is reported in The Recorder.
The suit was filed by the resident of Arizona, Jeffrey Burke, who reports that the exchange employees took advantage of information not available to all users at that time in December of 2017. The employees used the knowledge that Coinbase would soon begin supporting Bitcoin Cash (BCH) and made profit out of it.
The accusors who filed a complaint against Coinbase emphasize that this was done:
“Оn behalf of all Coinbase customers who placed purchase, sale or trade orders with Coinbase…during the period of December 19, 2017 through and including December 21, 2017… and who suffered monetary loss as a result of Defendants’ wrongdoing”.
Burke accuses the exchange of speculative actions of its employees or someone from the management, who invested into a certain number of funds a little while before the general opening of the BCH, which led to the price increase at a rapid pace. As a result, the price jumped up 130%, from $1,865 on the 18th of December to $4,300 on the 20th of December.
It is worth noting that the claim filed by Burke is the result of a general indignation over the growth spurt of BCH.
Brian Armstrong, the CEO of Coinbase, said the following concerning this issue:
“We’ve had a trading policy in place for some time at Coinbase. The policy prohibits employees and contractors from trading on “material non-public information”, such as when a new asset will be added to our platform. In addition to trading restrictions, it prohibits communication of material non-public information outside the company. This includes to friends and family”.
Armstrong also noted that the community should not worry, since the exchange will conduct an investigation on the misconduct of employees who violated the policy of Coinbase, and if the offender is found, the contract with him will be broken, and all the necessary legal measures are taken.
At the time when Burke filed a lawsuit against the cryptocurrency exchange, the perpetrators of speculation around BCH were not found officially.