Second largest in the world by volume cryptocurrency Trading platform Coinbase said it could sue nearly 1,000 users in Georgia for exploiting a pricing error.
Coinbase Announces It May Sue Those Who Earn Income By Taking Advantage Of Pricing Error On Its Platform
On August 29, nearly 1,000 Coinbase users in the country took advantage of this “arbitrage opportunity” when the local currency Lari was priced at $290 instead of $2.90 on the platform for about six hours. This group only makes up 0.001% of the US-based company’s users.
bitcoin exchange Coinbase said at the time that the glitch was the fault of a “third party”, without identifying the company. As such, the event highlights the risks posed to institutions by external partnerships, a longstanding concern of financial regulators.
US Currency Controller Michael Hsu had this to say on the matter last week:
“When everything is done within a bank, we know exactly who is responsible when things go wrong.
But when the business is split between an institution and fintech startups with different business models, that’s when the risk disappears.”
According to a company spokesperson, the amount of money the cryptocurrency exchange lost due to the disruption in Georgia, which the company refused to disclose, was “insignificant”.
However, a company spokesperson said in a written statement, “Coinbase is working with law firm Gvinadze & Partners to help recover improperly invested funds.”
The company representative said:
“We cannot comment on the status of specific claims or cases.
However, users who return improperly deposited funds will not be subject to further legal action.”
*Not investment advice.
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