Tripp Levy PLLC, a new York based, leading national securities and shareholder rights law firm, announced last week that it is investigating Coinbase, Inc. for allegedly making false and misleading statements to prospective and current users of Coinbase’s Bitcoin Exchange regarding its business.
On January 26, 2015, Coinbase announced that it launched the first regulated Bitcoin Exchange in the United States, and that it is licensed to do business in 25 states, including New York and California.
Coinbase spokesman James Watkins mentioned at Coindesk earlier this week: “The Exchange is also available to users in California and New York. These states fall into a regulatory gray area while they work to establish a framework for regulating virtual currency companies.”
Coinbase’s statement may have artificially inflated the price of Bitcoins as the cyber currency rose to $263. However, it was later revealed by New York’s Department of Financial Services and California’s Department of Business Oversight that Coinbase did not have the licenses necessary to operate as a Bitcoin Exchange in New York or California. Following this announcement, the price of a Bitcoin fell to $233.
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Tripp Levy PLLC represents individual and institutional shareholders and, along with its affiliate, has recovered billions of dollars for shareholders in similar actions around the globe. Tripp Levy PLLC is affiliated with the law firm Milberg LLP.
California Department of Business Oversight Commissioner Jan Lynn Owen said in a statement Tuesday, “The California Department of Business Oversight has not decided whether to regulate virtual currency transactions or the businesses that arrange such transactions, under the state’s Money Transmission Act. California consumers should be aware Coinbase Exchange is not regulated or licensed by the State.”
Coinbase is countering the allegation with two important facts: Firstly it claims to have full compliance in 14 states, along with indications from 8 other states that these licences were not required to launch the exchange. Secondly Coinbase is “registered with FinCEN as a Money Services Business (MSB), which means the company itself is regulated at the federal level.” However, Coinbase is bound to face consequences if the states in question determine that Coinbase operated illegally.
(image source: TechCrunch)