Nearly 1,000 users in Georgia will soon be sued by Coinbase, the second-largest bitcoin trading platform in the world, for abusing a price error.
According to reports, Georgian users of Coinbase, the second-largest cryptocurrency exchange in the world, may be subject to legal action as a result of a pricing error that happened on August 29. The mistake caused the Lari, the local currency, to be incorrectly valued on the exchange, where it should have cost $290 instead of $2.90. According to reports, a third party was responsible for the issue, which persisted for roughly six hours.
Coinbase claims that a “third party” was at blame for the failure. Therefore, the incident serves as an example of the ongoing worry of financial regulators, who are aware of the risks posed to crypto institutions by outside partners.
A representative for Coinbase said that the company is collaborating with the legal team at Gvinadze & Partners to help it recover the funds that were obtained illegally. Even though the spokesman was unable to go into great detail about the specifics of the lawsuit, they did say that any users who returned their money would be exempt from further legal action. Users profited significantly during the glitch, generating tens of millions of dollars in trading. To put the inaccuracy in perspective, consider that one Bitcoin was trading for between 5 and 6 million lari ($1.7 million), as opposed to the average price at the time the problem occurred, which was between 55,000 and 60,000 lari. According to reports, Tbilisi’s ATMs ran out of banknotes as dealers cashed in their earnings.
Traders after the pricing issue said that their bank accounts had been stopped after they had sold their Lari and withdrawn fiat to their accounts. Days afterwards, bank cards and accounts were defrosted without any intervention from the merchants. On September 24, Gvinadze & Partners did send a message to the traders informing them that “Coinbase is determined to take any and all available legal procedures to reclaim illegally credited cash as soon as practical.” The email also threatened legal action against recipients if they did not reply and refund the money. According to a person with knowledge of the situation, two domestic banks are purportedly involved in the freezing of funds, although not at Coinbase’s request.