A federal judge has granted Coinbase’s motion to dismiss a lawsuit
that claimed the cryptocurrency exchange operator had allowed insider
trading related to its Dec. 2017 launch of bitcoin cash (BCH) trading.
The order, filed on Tuesday by U.S. District Court Judge Vince
Chhabria, dismissed plaintiff Jeffrey Berk’s claims, stating that he had
failed to present a legal basis for his allegation that Coinbase was liable for investor losses related to the infamous BCH rollout, which saw the bitcoin cash price spike wildly in advance of the surprise launch.
Judge Chhabria wrote:
“Taking Berk’s negligence claim as an example, Berk fails
to describe the scope or content of Coinbase’s duty in anything more
than broad generalities. 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.”
While some had initially characterized the ruling as a “win” for
Coinbase, Stephen Palley, a litigator who leads legal firm Anderson
Kill’s blockchain and cryptocurrency group, said that the order was
actually a “mixed bag” for the company.
With one exception, the judge dismissed the plaintiff’s claims
without prejudice, giving him a 21-day window to amend his complaint to
place it on more solid legal footing.
In addition to allowing the plaintiff to amend the lawsuit and take
another shot at the exchange operator, the judge dismissed Coinbase’s
motion to compel Berk into arbitration, stating that the firm’s
mandatory arbitration clause does not necessarily apply to market
manipulation claims. According to Palley, this judgment could cause the
cryptocurrency exchange trouble when they try to compel customers into
arbitration in the future.
“You can win a motion and lose at the same time,” he concluded.
Read the full ruling below:
Coinbase Bitcoin Cash Dismissal by CCN on Scribd
