The good, the bad, and the ugly a week in the life of Coinbase. Popular cryptocurrency purchasing platform Coinbase finds itself in the mists of lawsuits, rumors, and operational pivots this week.

Coinbase is the largest U.S. based exchange and weighs in at number 7 in the world. So it should come as no surprise that they have been making headlines recently. From the scandal of multiple lawsuits to the resurrection of rumors surrounding XRP, and ultimately announcing their weighted cryptocurrency index fund,  it would seem the company has had its hands full this week.

Lawsuits

It seems as one legal battle ends another begins for the popular exchange. In the past year, the company has spent a fair amount of time in and out of the courtroom, most notably in their heroic effort to fight an IRS overreach when it comes to gathering sensitive customer data. However, this time around the exchange finds itself on the other side of the table, facing both allegations of insider trading and unfair business practices.

In December of last year, Coinbase unexpected added Bitcoin Cash (BCH) to their platform, causing the price to skyrocket while the ever popular Bitcoin (BTC) and other altcoins fell drastically. So you may be asking yourself, what’s the big deal? After all, Coinbase is a cryptocurrency exchange and as such its kinda their business to offer popular cryptocurrencies to the public.

The problem and ultimately the lawsuit stems from how Coinbase went about integrating Bitcoin Cash. Normally when an exchange decides on offering a new Altcoin there is kind of a protocol in place starting with online hype, news of a partnership, and some sort of marketing/public expectation surrounding a launch date.

However, when it comes to how Coinbase added BCH, it almost caught the community completely off guard. It more or less just kinda went “Live” on the exchange one day, causing a huge sell-off of positions in other coins and a market shift to the newly forked Bitcoin Cash. The panic and surprise of the market crashed the popular cryptocurrency exchange and sent prices to the “Moon.”

In the wake, accusations and rumors began of insider trading, in response the company clarified that their employees had been restricted from trading on the knowledge leading up to the launch.

Despite the company’s official attempts to assure the public there was no wrongdoing they now find themselves in a class action. The lawsuit was filed in Arizona, by Jeffrey Berk, and claims that Coinbase knowingly “artificially inflated prices” by disclosing buy and sell orders only moments after the launch.

Coinbase CEO, Brian Armstrong said at the time:

“If we find evidence of any employee or contractor violating our policies, directly or indirectly, I will not hesitate to terminate the employee immediately.”

Unfair business practices

This lawsuit is a result of months of allegations against the company. The action is, “on behalf of all Coinbase customers who placed purchase, sale or trade order with Coinbase… during the period of Dec. 19, 2017 through and including Dec. 21, 2017… and who suffered monetary loss as a result of defendants’ wrongdoing.”

The company also is accused of keeping funds sent via email that sat unclaimed by their recipients. Given the number of eyes on the company, Coinbase has to tread lightly when it comes to the class action lawsuits as to not be grouped into other defunct crypto services and scammers.

The lawsuit was filed in the District Court for the Northern District of California by Restis Law firm on behalf of two clients seeking reimbursement of their funds, including those sent via email. They claim that BTC was emailed to people prior to the mainstream popularity and as a result sat unclaimed in many emails, and instead of simply returning the unclaimed funds, Coinbase kept them. This falls under a laundry list of unfair business practices the law firm alleges against the exchange.

The Resurrection of Ripple Rumors

Beside various lawsuits, Coinbase found themselves in a very familiar situation this past week.

The company often finds themselves at the center of internet “buzz” and “rumors” surrounding what coin will be next. This past week, an old rumor resurrected almost overnight, that the long-anticipated XRP (Ripple), would finally be added to the platform despite the company’s previous statement.

Coinbase previously said:  

“As of the date of this statement, we have made no decision to add additional assets to either GDAX or Coinbase. Any statement to the contrary is untrue and not authorized by the company.”

The rumors sparked a temporary price increase for XRP followed by a drastic downturn when Coinbase took to social media to discredit the addition.

Our January 4th, 2018 statement continues to stand: we have made no decision to add additional assets to either GDAX or Coinbase.

Any statement to the contrary is untrue and not authorized by the company. https://t.co/X04oN6BcGp

— Coinbase (@coinbase) March 5, 2018

Light at the end of the tunnel

The news hasn’t been all bad for Coinbase this week, in an effort to secure themselves in the market moving forward the company announced their weighted index fund for cryptocurrencies. This will allow U.S. citizens exposure to all assets listed on the company’s exchange GDAX, depending on their market capitalization.

This offers the company an alternative path forward and allows them to expand their client base to those who are more familiar with traditional investments. This is an effort to aline crypto and traditional assets.

The announcement has been met with skepticism by those loyal to traditional crypto values. Despite the mixed feelings it certainly has put more outside eyes on cryptocurrency.

As the crypto space grows in part thanks to companies like Coinbase, so has government interest in the marketplace. In a story we covered previously, this week the U.S. Securities and Exchange Commission (SEC) announced that all U.S. based exchanges must be registered with them and be fully compliant with their rules and regulations.