A California court has dropped fraud charges filed against US-based crypto exchange Coinbase in connection with the listing of Bitcoin Cash in December 2017.
According to the court order issued on Tuesday, US District Judge Vince Chhabria of the Northern District of California dismissed the fraud charges against the crypto exchange for halting Bitcoin Cash trading two minutes after its listing.
“The plaintiffs identify three potential laws for the ‘unlawful’ prong: the Commodities Exchange Act, the FinCEN rules, and New York state regulations,” the judge noted.
“Even assuming Bitcoin Cash is a commodity subject to the Commodities Exchange Act, the complaint does not sufficiently explain how the launch manipulated the market for Bitcoin Cash or for Bitcoin. Nor does it plausibly or coherently describe Coinbase and Armstrong’s motive to manipulate the prices.”
Market manipulation or just a precautionary measure?
Coinbase listed Bitcoin Cash in December 2017 when the crypto market was moving towards its peak. Then, only a four-months-old forked coin, the value of Bitcoin Cash also skyrocketed with the news of Coinbase listing.
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The sudden spike in BCH price forced the San Francisco-headquartered exchange to suspend trading services, which barred the traders from offloading the coins at a higher price.
The exchange was also accused of insider trading, blaming the executives for making profits by hoarding Bitcoin Cash prior to its listing on Coinbase.
A trader named Jeffery Berk then filed the lawsuit related to the listing.
“The motion to dismiss the fraud claims is granted. The plaintiffs have not particularly pleaded their reliance on Coinbase’s allegedly fraudulent statements,” the court document stated.
“Moreover, while the factual allegations paint a compelling picture of an incompetent launch by Coinbase, the complaint does not outline a coherent account of fraud by Coinbase, Armstrong, and Farmer.”
Meanwhile, Coinbase is planning to expand its altcoin offerings with the listing of 8 new digital currencies.