Coinbase has traditionally been extremely selective when it comes to adding new coins on its platform, but it appears things might be about to change: the San Francisco-based company has announced plans to support Ethereum-based ERC20 tokens on its cryptocurrency exchange desk in the near future. For those unfamiliar, ERC20 is a technical protocol developers can use to create utility-based tokens on the Ethereum network. Among hundreds others, the list of ERC20-powered tokens includes popular currencies like EOS, Golem and QTUM. Indeed, the technical standard has often been employed by fraudulent startups seeking to launch their own tokens in an…
You might have missed a one-off opportunity to become a cryptocurrency multi-billionaire. It appears popular exchange desk Coinbase suffered from a flaw in its Ethereum smart contract setup, which made it possible to reward yourself with a virtually infinite sum of ETH, according to newly surfaced vulnerability report. The jarring vulnerability was discovered by Dutch fintech firm VI Company, which reported the issue to Coinbase back in late December last year. The exchange desk fixed the issue a month later in January and has since rewarded the Dutch company with a $ 10,000 bounty. “By using a smart contract to distribute…
A group of private cryptocurrency traders just filed a class action lawsuit against Coinbase, one of the world’s largest digital currency exchanges. The group alleges that Coinbase employees engaged in insider trading of the relatively new cryptocurrency called bitcoin cash.
Exchanges are a vital part of the cryptocurrency ecosystem. When traders want to purchase crypto using traditional currency or exchange one cryptocurrency for another, they do so via an exchange. These digital asset exchanges are typically websites (though they don’t have to be), and each exchange can choose which cryptos it is willing to accept.
On August 1, 2017, bitcoin — arguably the first cryptocurrency — “forked” into two individual lines of cryptocurrency: bitcoin and bitcoin cash. Anyone who already owned bitcoin prior to the fork found themselves the owner of an identical amount of bitcoin cash after August 1st. Unfortunately, if the exchange that hosted that trader’s bitcoin didn’t choose to accept bitcoin cash, the trader had no way to access their new type of digital currency.
A few days prior to the anticipated bitcoin fork, Coinbase announced it had no intention of supporting bitcoin cash and urged users to withdraw their bitcoin from Coinbase if they wanted access to bitcoin cash. Then, on August 3, Coinbase reversed that decision. The exchange said GDAX, its trading platform marketed toward more sophisticated traders, would start accepting trading of bitcoin cash at some point before January 1 of the following year.
None of that is illegal. What may be illegal, however, is what happened a little over four months later.
Coincidence or Collaboration?
On December 19, 2017 Coinbase tweeted without prior warning that it would begin accepting bitcoin cash trades. Within minutes, that crypto’s value shot up by almost $ 1,000. The sudden value increase caused liquidity issues for the GDAX trading platform, meaning the exchange didn’t have enough of the asset (bitcoin cash) to meet trade demand.
This liquidity issue ended up forcing GDAX to cancel any trades it couldn’t satisfy — basically, any placed more than a few minutes after Coinbase’s Twitter announcement. Anyone who didn’t meet this cut off had to wait for GDAX to address the liquidity issue before they could trade their bitcoin cash.
An update on Bitcoin Cash for our customers: sends and receives are functional.
Cryptocurrency trader Jeffery Berk, who filed the class action lawsuit in a California district court, alleges that some people knew about Coinbase’s decision in advance. These people began trading bitcoin cash on other exchanges hours before the tweet, increasing the crypto’s value. Then, these “insiders” flooded GDAX with orders the moment the platform began accepting bitcoin cash to the detriment of other traders who were unaware of the impending announcement.
“When Coinbase’s customers’ trades were finally executed, it was only after the insiders had driven up the price of Bitcoin Cash, and thus the remaining Bitcoin customers only received their Bitcoin Cash at artificially inflated prices that had been manipulated well beyond the fair market value of Bitcoin Cash at that time,” the lawsuit alleged.
In the lawsuit, Berk wrote that he placed an order just five minutes after Coinbase’s tweet, but that the exchange didn’t fill his order until the next day, at which point he was paying almost double the price set when he placed the order.
Under the Microscope
The “insiders” referred to in Berk’s lawsuit could be employees of Coinbase or they could be people Coinbase’s employees shared information with. Either way, if those people profited from knowing information about the company’s decision before Coinbase made that information public, they engaged in illegal insider trading.
On December 19, 2017 Coinbase CEO Brian Armstrong released a Medium post detailing the company’s employee trading policy and announcing plans to look into the almost-immediate accusations of insider trading. A company spokesperson told Motherboard they had hired a law firm to investigate the situation and that, so far, the firm hasn’t uncovered anything inappropriate.
Clearly, traders aren’t content with waiting for Coinbase to police itself, and now, the California court system is involved.
This lawsuit follows closely on the heels of the news that the U.S. Securities and Exchange Commission (SEC) is cracking down on the other end of the crypto spectrum — the initial coin offerings that startups sell to initial investors to fund the companies’ blockchain endeavors.
Almost 10 years after the creation of bitcoin, the U.S. legal system is finally ready to take a closer look at crypto. Hopefully, that involvement will increase the legitimacy of digital currencies, and decrease some of the fraud that plagues the largely unregulated industry.
Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.
A couple of weeks back the Litecoin (LTC) blockchain split in two to form the new Litecoin Cash (LCC) hard fork. But despite some requests from users, it appears that leading cryptocurrency exchange desk Coinbase has no immediate plans to add Litecoin Cash trading pairs on its platform – at least not for the time being. “We’re always monitoring potential forks from a security/stability standpoint, core developer roadmaps and customers perspective.” a spokesperson for Coinbase told TNW. “Ultimately, we want to do what’s best for customers while still being secure and practical.” While the company refrained from providing more details on…
Coinbase told its customers on Friday that it plans to comply with a court order and hand over about 13,000 customers’ data to the IRS within 21 days. The IRS made the request back in November 2016, asking for the Coinbase records of all the people who bought bitcoin from 2013 to 2015 to seek out those who were evading cryptocurrency taxes. Anyone affected by the order should now have received an email from Coinbase to that effect.
Coinbase heavily resisted the summons. But ultimately, in November last year, the San Francisco court ruled Coinbase had to turn over identifying records for all users who have completed transactions of more than $ 20,000 through their accounts in a single year between 2013 and 2015. The data requested includes…
Does the CFO hire say anything about an IPO at Coinbase?
Coinbase is moving to hire a chief financial officer in what would be a big move for the cryptocurrency platform’s growth plans.
It is also raising questions about the company’s potential plans to eventually go public. Adding an experienced, high-powered CFO is often read as a move that a business is eyeing an IPO. But that’s perhaps a less-revealing tea leaf at a financial services company like Coinbase, which could use help fine-tuning its massive, complicated business model.
Coinbase has been in late-stage talks with a number of candidates, according to people close to the company, and hiring a permanent CFO is one of its top priorities this year. Veteran CFO Tim Laehy joined the company last October to serve in the role in an interim capacity, according to his LinkedIn profile, but Laehy is not expected to stay in that role.
Other expected hires include vice presidents to handle communications and corporate development. Together, those additions would help the company manage its massive growth, which has been fueled by the surge of interest in cryptocurrencies late last year.
Coinbase declined to comment. CEO Brian Armstrong wrote a detailed post last year about how to hire senior executives, saying that it typically takes him six to 12 months to close on the right person.
The company is also continuing to fend off late-stage investors who have expressed interest in purchasing existing shares from the company, despite a recent warning from Coinbase to knock it off in a statement issued to Recode last month. Shareholders have been approached over the last few months by people interested in investing in the company at a valuation as low as $ 2 billion and as a high as $ 8 billion — a range that shows how volatile, opaque and illiquid the market is for hungry Coinbase investors.
So the company is weighing whether to launch a new financing round that would be mostly intended to allow for some existing investors to cash out as part of a “secondary” transaction, according to people with knowledge of the company’s thinking. The round, if launched, could also have a small “primary” component, in which Coinbase raises more capital, though the company is not wanting for money.
Coinbase doesn’t officially allow secondary trading, so a sanctioned round like this would require the company’s approval. Investors in recent weeks have been negotiating whether to sell shares or buy shares — hopefully with some guidance from the company about what would be a fair share price.
A large secondary transaction would likely weaken the pressure from any existing investors for the company to soon go public so that they can finally profit off their bet. And it would satisfy the swarming investors who want a piece of it.
Coinbase has also been adding independent directors to its board, another move typically done to prepare for an IPO. Facebook’s David Marcus joined the Coinbase board in December.
The company was last valued at $ 1.6 billion in August — a round that occurred largely before cryptocurrency’s bull run late last year. That round was led by IVP, a late-stage firm that specializes in leading one of a portfolio company’s last private financing rounds before the company sells its shares to the public.
It turns out that card issuer Visa is in fact the culprit in an increasingly messy Coinbase customer support nightmare that’s seen multiple users’ cryptocurrency accounts hit with reverse transactions, unauthorized withdrawals, and other unexplained fees. The issue began picking up steam in online crypto communities earlier this month, and Coinbase first responded last week citing a change in how credit card companies classify digital currency transactions. The company at the time said it had identified a solution.
Late Friday, Coinbase disclosed on Twitter that it was Visa that was actually reversing multiple weeks’ worth of old transactions under a new so-called merchant category code, or MCC, which is used to classify a business or…
Following a technical issue which resulted in Coinbase overcharging numerous cryptocurrency buyers for up to 50 times their original purchase, VISA has now come out to blame the bug on the popular exchange desk. “Visa has not made any systems changes that would result in the duplicate transactions cardholders are reporting,” a Visa spokesperson told TNW. “We are also not aware of any other merchants who are experiencing this issue.” “We are reaching out to this merchant’s acquiring financial institution to offer assistance and to ensure cardholders are protected from unauthorized transactions,” the statement concluded. This dreadful situation first started shaping…
A number of Coinbase customers found themselves hit with duplicate charges for a single card-based purchase over the past few days. Some even reported losing tens of thousands after being charged 17, even 50, times. In a blog post updating customers… Engadget RSS Feed
Digital currency exchange Coinbase responded this afternoon to a report from The Verge regarding rampant overcharging of users and unauthorized withdrawals from their accounts, saying in a statement that the company has “identified a solution” to the problem. The issue, which began percolating on the dedicated Coinbase subreddit late last week, appears to be related to a recent change in the way credit cards classify digital currency transactions. Users were reporting empty cryptocurrency accounts as a result, which was creating panic and calls for legal action among Coinbase customers.
“We’re currently investigating an issue where some customers were charged incorrectly for purchases of digital currency with credit and debit cards,”…