A US court has dismissed the claims that Coinbase committed any fraud but mentioned that the company must face a lawsuit for negligently botching the launch of Bitcoin Cash. District Judge in San Francisco, Vince Chhabria issued an order on 6th August that nullified the allegations made by traders that Coinbase committed fraud by halting trading after two minutes.
Followers of the event which dates back to December 19, 2017, may recall that Coinbase had suddenly made a surprise announcement that the crypto would be listed on its institutional platform GDAX, after which Bitcoin Cash prices skyrocketed. The company subsequently halted trading in Bitcoin Cash within a few minutes of the official listing. Even though the trading community suspected that the price growth was due to insider trading taking place, Coinbase said that “significant volatility” had been the cause of the trading suspensions.
After a series of independent investigations in the matter, Coinbase refuted all allegations of insider trading occurring during the event. After the investigations concluded in July last year, the company stated that “We can report that the voluntary, independent internal investigation has come to a close, and we have determined to take no disciplinary action.”
The court order is the latest development on the lawsuit brought by trader Jeffery Berk over the past events. The judge summarized that “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.” He also mentioned that the launch was “incompetence born of haste,” on the part of Coinbase.
Many observers agree with Chhabria’s claim that the launch was enacted hastily, which resulted in problems from the very outset. As per the latest ruling, the suit’s claim of negligence can proceed and only buyers of Bitcoin Cash can move forward with legal proceedings.
The ruling also acquits Coinbase’s CEO, Brian Armstrong and head of product, David Farmer from any charges of fraud. The statement reads that “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.”
While buyers still believe that the debacle could have been avoided if Coinbase had announced the trading launch well in advance, the company has not made any comments about the ruling so far .