The judge presiding over a class action lawsuit against Coinbase over allegations of insider trading has approved Coinbase’s motion to dismiss the suit.
In March of 2018, Jeffrey Berk filed a class action lawsuit in the Northern District of California on behalf of himself and other investors against Coinbase. Specifically, the suit alleges that Coinbase had engaged in insider trading by alerting its own employees that Coinbase would fully support Bitcoin Cash at a later date, after publicly stating that they would not.
The suit goes on to allege that regular customers only had their trades go through after prices were artificially inflated by this insider trading. To compensate for the ensuing losses, the aggrieved group is seeking restitution from Coinbase.
On October 23, 2018, however, presiding judge Vince Chhabria granted a motion to dismiss the lawsuit against Coinbase, stating that “assessing whether Coinbase might have engaged in market manipulation or unfair business practices does not require ‘reference to the underlying agreement or interpretation of the parties’ contractual relationship.’”
Chhabria went on to state that “a reader of the Complaint is thus left wondering what Coinbase should have done differently, or why the rollout of Bitcoin Cash would have gone more smoothly had Coinbase done whatever Berk thinks is appropriate.”
Following allegations of insider trading, Coinbase launched an internal investigation to discern whether or not its employees gamed the system. In July 2018, the investigation found no irregularities with this listing or evidence of insider trading.
This motion does not itself constitute a dismissal, but, nevertheless, a dismissal is now much more likely. Judge Chhabria noted that he dismissed most of Berk’s claims without prejudice, but that Berk’s claims under the Commodities Exchange Act were dismissed with prejudice. To contest the dismissal, Berk and his legal team will have 21 days to file an amended complaint.
This case is but one suit in an ongoing legal battle between Coinbase and several of its customers, as Paul Vernon is also conducting a class action lawsuit in the state of California.
This lawsuit directly mentions allegations of insider trading regarding Coinbase’s handling of Bitcoin Cash but also invites plaintiffs to join the class action suit on the grounds of undelivered funds, platform breakdowns and account freezes. It is still unclear at this date how the motion on the Bitcoin Cash lawsuit will affect other investor class action suits, but for now it seems as if Coinbase is escaping these challenges at little financial cost.