When traders want to purchase crypto using traditional currency, or exchange one cryptocurrency for another, they do so via an exchange. Coinbase is one of the world’s largest, with over 13 million users. Over the past few days it has been hit with two class action lawsuits, both in federal district court in California.
The first an insider trading case. The suit claims Coinbase employees unfairly profited from the December listing of bitcoin cash. The price of bitcoin cash — which spun off from bitcoin in August — shot up almost $1,000 when Coinbase announced on Dec. 19 it would start trading in the digital currency. While the news came as a surprise to most people, the suit says employees knew about the listing ahead of time, as well as anyone they might have told, and those insiders profited unfairly when the price shot up.
The second suit accuses Coinbase of violating California’s Unclaimed Property Law. The suit stem from the exchange allowing its users to send cryptocurrecnies to external email addresses, as opposed to cryptocurrency wallets. The emails would come with a link allowing the recipient to create a Coinbase account and claim their cryptocurrency. Questions arose in those cases in which the recipients did not open Coinbase accounts. As alleged in the introduction to the complaint:
Imagine writing a cashier’s check to a friend. The bank withdraws funds from your account, but your friend never cashes the check. Does the bank get to keep the funds? The law clearly says no. But this is exactly what has happened with cryptocurrencies sent through Coinbase.com.
The Plaintiffs allege that Coinbase kept the unclaimed cryptocurrencies instead of notifying the senders that the funds were never claimed.