Investigations within the Coinbase employee roster have come to an end after reports came out that insider trading had been going on at the exchange in order to manipulate the price of Bitcoin Cash. The premise of this is that employees of Coinbase have been accused of using GDAX (now Coinbase Pro) to gain insider knowledge of a Bitcoin Cash price surge, and traded accordingly in order to make a large profit. This in turn can encourage the manipulation of the markets which as we know, can change the course of peoples investments. This technically would not be considered as illegal and moreover, Roger Ver of Bitcoin Cash spoke out about the allegations referring to the event as a non-crime. Even so though, this sort of manipulation is dishonest, and very much frowned upon, therefore Coinbase where forced to act.Now, on the other side of the Coinbase investigations it seems that Coinbase won’t be taking any further action, after concluding no further action will be required.Even so though, a class action lawsuit against Coinbase regarding this issue is still active and thus, may change the outcome of the entire investigation in the long run. According to Finance Magnates:
“A class-action lawsuit was filed against Coinbase in March 2018 by Jeffery Berk, a customer. Berk claimed that Coinbase employees flooded the exchange with orders as soon as the announcement was made, which they were able to do because they knew about it beforehand. People who did not have the privilege of working at Coinbase were thus at a disadvantage – the suit claims that the behaviour cost the public $5 million. The case is still in the procedural stages.”
See the full report for yourself, here. If insider trading has taken place that Coinbase hasn’t picked up on, then hopefully if the lawsuit suggests otherwise they take appropriate action. If however on the flipside, it turns out Coinbase are actually trying to cover something up here, then we could have a very different outcome on our hands. As mentioned, insider trading would not have been illegal, it it will indeed have severe consequences for Coinbase, tarnishing its name and certainly reducing the trust of its customers.
Robert first came across Bitcoin in 2016 during a meetup in Belgium, and has been hooked ever since. With a background in Economics, you can find Robert frequently looking at the Twitter feed of the SEC for any regulatory updates relating to Bitcoin and Crypto in general.
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