Cryptocurrency exchange Coinbase is hinting at the possibility of suing some of its users in the Republic of Georgia that profited from an unfortunate pricing glitch on August 29.
Coinbase, the second largest crypto exchange in the world, is reportedly considering the possibility of bringing a lawsuit against some of its users in the eastern European nation of Georgia for a pricing glitch that occurred on August 29, Blockworks details. The error saw the local currency, the Lari, priced erroneously, at $290 on the exchange, rather than the correct price of $2.90. The glitch is said to have been caused by a third party and lasted for about six hours.
A spokesperson for Coinbase explained that it is working with law firm Gvinadze & Partners to help it recover the improperly gained funds. Although the spokesperson could not elaborate much on the details of litigation, they did indicate that any users who returned funds would not be subject to any further legal actions. During the period of the glitch, users made a significant profit, amounting to tens of millions of dollars in trade. To put the error into perspective: one Bitcoin was trading for 5,000,000 to 6,000,000 Lari, which translates into $1.7 million apiece – whereas the average price when the glitch took place was around 55,000 to 60,000 lari. ATMs in Georgia’s capital, Tbilisi, are reported to have run out of banknotes as traders cashed in their profits.
Following the pricing error, traders who spoke to Blockworks reported that their bank accounts were frozen after they sold their Lari and withdrew fiat to their accounts. Days later, accounts and bank cards were unfrozen with no action from the traders. The traders did however receive communication from Gvinadze & Partners on September 24 saying “Coinbase is determined to use any and all available legal means to recover improperly credited funds as soon as practical.” The email further warned that if users failed to respond and return the money, legal action would be instituted against them. Two domestic banks are reportedly involved in the freezing of funds, but not at the direction of Coinbase, a source familiar with the matter said.
Per its user agreement, Coinbase reserves the right to claim back funds or reverse a transaction that has been found to have been made in error.
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