Monday, November 28, 2022

Coinbase Exchange Goes After Customers Who Profited From Price Glitch

American-based crypto exchange Coinbase is going after its users who recently took advantage of a pricing glitch on its platform. The incident happened on August 29, when Coinbase mispriced Georgia’s local currency — the lari, for $290 instead of $2.90. The glitch lasted for about six hours, and according to Coinbase, around 1000 users in the region latched on to the rare opportunity.

Coinbase Exchange Threaten Users With Legal Action 

Fresh reports emerging from Coindesk, however, suggest that the exchange may now be ready to sue the concerned users. This is despite the initial claims by the crypto trading platform that the amount lost to the confusion was “immaterial.”

According to a company spokesperson who spoke to the news site on the condition of anonymity, the exchange is partnering with law firm Gvinadze & Partners. The move is in line with its efforts toward retrieving its lost funds. However, the full details of the potential litigation remain undisclosed. Nonetheless, the spokesperson assures that users who return the fund will not have to face any further charges.

Meanwhile, some sample emails have surfaced in the inbox of some of the users who took advantage of the situation. Via the email, Coinbase reportedly vowed to use all legal means necessary to recover the funds as soon as possible.

Financial Regulators Wary of ‘Third-Party’ Risks

The pricing glitch on Coinbase, according to the exchange was caused by a “third party.” But despite withholding the third party’s name, the event further highlights the ever-present concerns of financial regulators over the risks of bank/fintech partnerships.

Just as recently as a week ago, the U.S. Comptroller of the Currency, Michael Hsu mentioned how easy it is to deal with a single entity or financial institution when things go south. But just as was the case with Coinbase, Hsu also added that risks may begin to manifest when work is split between different institutions. Thus, making an impossible situation out of pinpointing the problem source or creating a solution.

As of press time, however, there is still no official statement from Coinbase regarding the said lawsuit.

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