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Business & Finance

Is Coinbase Still Trapped with the Insider Trading Case?

The investigations carried out on the case of Coinbase and their insider trading of Bitcoin cash didn’t turn out against Coinbase, as no evidence was found to support the allegations. The exchange that hired the two law firms to carry out the investigations of the accusations dropped the case as they couldn’t find any wrongdoings.

The insider trading case

Coinbase, America’s largest cryptocurrency exchange, faced a series of accusations and lawsuits over alleged insider trading since last December when the exchange claimed that it wouldn’t include  Bitcoin cash on their platform until 1st of January, but surprisingly included the digital currency beforehand.

Coinbase surprised users with the announcement of listing Bitcoin Cash on its platform on the same day when the prices of Bitcoin saw an anomalous spike. Previously, Coinbase stated that they wouldn’t include the currency until the 1st of January, 2018. The buyers who bought the currency before the announcement found their money doubled in a matter of minutes. This suspicious announcement on the day of the anomaly couldn’t stay out of the sight of the industry players and they suspected that Coinbase had an idea about the price rise before they announced it in their blog post.

Previously, people didn’t have accesses to the BCH, but the platform provided by Coinbase made it accessible to millions ahead of the spike event making the crypto giants suspicious of the act.

On his twitter, George Kikvadze, the executive vice chairman of BitFury said:

Statements made by Coinbase

In return to the allegations made, Coinbase said in their blog post that:

Today we announced support for Bitcoin Cash (BCH). It appears the price of Bitcoin Cash on other exchanges increased in the hours before our announcement. Digital currency prices fluctuate quite a lot and we have no indication of any wrongdoing at this time.

Immediately after the allegations were made, Coinbase announced the launch of an internal investigation and hired two law firms to look into the matter if any of their employees took part in the insider tradings. In an interview with Fortune, Coinbase said:

We would not hesitate to terminate an employee or contractor and/or take appropriate legal action if evidence showed our policies were violated,” a company spokesperson said. “We can report that the voluntary, independent internal investigation has come to a close, and we have determined to take no disciplinary action.

Apart from this, in result of the outcry, the CEO, Brian Armstrong himself explicitly explained his employee policy in his blog post that:

“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 is 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.

Our launch of Bitcoin Cash today is no exception to this. All Coinbase employees and contractors were explicitly prohibited from trading Bitcoin Cash and from disclosing our launch plans over a month ago. This was communicated multiple times via multiple channels to employees. For instance, I made sure it was emphasized at our Friday Q&A sessions, and in emails sent to all employees. I view it as a key part of my job to set the tone from the top about how we all must act to ensure success. The trading restriction, which applies to all personal trading activity on any platform, remains in effect now.”

Situation after the outcomes of the investigation

Although the exchange pursued the investigations within the company and found out that there were no wrongdoings that took place, the allegations didn’t quite halt. In March, a person named Jeffrey Berk filed a class action lawsuit against Coinbase alleging professional negligence. The resident wants to be paid $5 million by the company to him and other investors like him.

Shehryar Hasan

Performing artist, guitarist and sub-editor at BlockPublisher. Shehryar is an electrical engineer and blockchain enthusiast. He holds investments in bitcoin, ethereum, OST, TRX and Ripple. Email: shehryar@blockpublisher.com or contact the editor at editor.news@blockpublisher.com

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