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.
Mixed bag today for Coinbase in Bcash lawsuit ruling.
+ CB arb. clause doesn’t nec. apply to market manipulation claims.
+ Plaintiff 21 days to fix lawsuit & allege, y’know, a real cause of action.
+ purported CEA claims dismissed with prejudice (“you’re not the CFTC, man”) pic.twitter.com/DAcFuG1PeS
— Palley (@stephendpalley) October 23, 2018
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:
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