Law Firm Says It's Investigating Coinbase for False and Misleading Statements, Cites Fall in Prices

A New York law firm, Tripp Levy PLLC, says it is investigating Coinbase "for allegedly making false and misleading statements" over the launch of its bitcoin exchange.

The headline in Coinbase's January 26 blog post reads, "Coinbase Launches First Regulated Bitcoin Exchange in the U.S." Coinbase typically takes a conservative approach to things, and such a headline did seem out of sorts.

The headline is not entirely accurate either. While it may have obtained money services licensing in some states, "Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term" technically does not yet exist. Furthermore, there are several exchanges in the US that are no less "regulated" than Coinbase.

Several media outlets used a similar headline, thereby gaining a wider audience and granting greater credibility to the claim. Many readers also did not notice such nuances, which were largely lost in the hype and excitement at the time.

The law firm did not go into explicit specifics of what type of legal action, if any, may emerge from its investigation. It welcomes users of the exchange to provide additional information for the investigation or to obtain information about it.

It did make reference, however, to the sharp run-up in prices between the announcement and actual launch, followed by an equally steep drop in prices immediately after launch. At the time, the price action did raise eyebrows, but has been largely overlooked until now. The bitcoin trading market is indeed unregulated and such Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term has become an accepted reality.

The firm blames the drop in prices on announcements by California and New York regulators stating that the exchange is not regulated, alleging that Coinbase's claims inflated prices and caused investors to lose money.