This Month in Crypto: The Struggles of Binance; the Trials of Coinbase
- The Knowledge Group
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The head of China-based digital currency exchange Binance reassured customers this week that their accounts remain safe following panic over a possible hack.
At first, Binance suspended withdrawals while it investigated whether investors who use trading bots were compromised and pointed out that Binance itself was not hacked.
Then, CEO Changpeng Zhao tweeted that the improper transactions were located and rectified.
Zhao—whose Twitter handle carries the parenthetical addition “not giving crypto away”—advised users to be wary of future phishing attempts—such as people offering to give crypto away.
(Knowledge Group readers: Don’t fall for anyone’s surprise digital currency giveaway.)
Coinbase in Court
Meanwhile, Bitcoin dropped under $10,000 as the U.S. exchange Coinbase faced new federal lawsuits in San Francisco.
One class action claims Coinbase employees had advance knowledge of the company’s Dec. 20, 2017 rollout of Bitcoin Cash, and that the employees’ communications about the rollout drove up the currency’s price before and during its release. Plaintiffs claim that Coinbase was negligent; that it never released the full findings of its internal investigation; and that its actions offend California’s Unfair Competition statute.
In a different lawsuit being heard by a federal magistrate in Oakland, two users in California claim they were kept from redeeming cryptocurrency that had been transferred to them from a Coinbase account. They explain, in Faasse v. Coinbase, that the intended recipient of digital currency from a Coinbase account holder will get only a temporary link to accept the transfer. Under California law, the plaintiffs argue, Coinbase should release unclaimed assets to the state’s “unclaimed property” to allow late claims.
What Impact Will These Struggles Have on Bitcoin and Other Cryptocurrency?
They lend weight to the argument for regulation.
During a February hearing of the SEC and Commodities and Futures Trading Commission, the SEC chair vowed to roll out sensible regulations for exchanges for buying and selling the well established coins Bitcoin and Ethereum. New cryptocurrencies, as they emerge on the scene through Initial Coin Offerings, will be deemed securities, not coins, and face more stringent rules. Be sure to stay up-to-date with the latest events in the financial filed whilst earning continuing education credits at our events, you can see our full list of live and recorded events by clicking here.