Home News Exchange Coinbase Must Face Negligence Suit Says US Court

Coinbase Must Face Negligence Suit Says US Court

August 08, 2019 12:28
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Coinbase Office
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Looks like Coinbase is in soup again. A United States Court judge ruled that the exchange must face a negligence lawsuit from customers who bought bitcoin cash (BCH) following its allegedly botched listing during the 2017 bull run, news portal CoinDesk reported.

The ruling said, “Even if the plaintiffs could not access Coinbase’s exchange without accepting the terms of the user agreement (and therefore could not have been injured but for the agreement), Coinbase’s negligence is actionable separate and apart from any contractual remedies the plaintiffs may (or may not) have available.”

However, the ruling added that the negligence claim does not arise under the user agreement. The judge denied the exchange’s motion to move the case to arbitration.

The ruling further added that Coinbase breached its duty to maintain a functional market. It said Coinbase halted trading within three minutes of the launch is indicative of dysfunction.

It said, “The buyers have also identified precautions Coinbase could have taken to avert the massive spike in the price of Bitcoin Cash on its exchange. Most prominently, Coinbase could have announced its launch of trading in Bitcoin Cash more than an hour in advance, which would have permitted more buyers and sellers to place limit orders.That way, Coinbase could have ensured the liquidity and market capitalization needed for an orderly market.”

This is the second lawsuit Coinbase has received in the past one year. In March last year, a suit accused Coinbase of facilitating the transaction of cryptocurrencies such as ethereum, bitcoin to external addresses such as email IDs as opposed to sending it to users’ wallets.

The petitioners, at the time, had said, “Coinbase users can send Bitcoin, Ethereum, Litecoin and Bitcoin Cash (collectively “Cryptocurrencies”) to an email address. Plaintiffs and the Class were sent an email from Coinbase stating they had Cryptocurrency, with a link to create a Coinbase account to redeem it. But until 2017, most people never heard of a “bitcoin” or cryptocurrency, so most of these emails were disregarded.”

The suit asked the exchange to turn over the undelivered cryptocurrencies to the State of California to prevent “unjust enrichment of Coinbase”.

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