In recent weeks, Coinbase has been hit with three federal lawsuits alleging various types of wrongdoing ranging from security negligence to wrongfully keeping bitcoins and insider trading during last year’s Bitcoin Cash fork.

None of the lawsuits are related to the bitcoin exchange’s recent agreement to comply with a court order to hand over thousands of users’ personal data to the Internal Revenue Service as part of an investigation into tax fraud.

The first case, which was filed in February, involves a New York City man who called what he believed was a Coinbase customer service number to inquire about a pending litecoin transaction. It wasn’t Coinbase’s number. Over the course of the call, the man, Ezra Sultan, gave up his personal information (presumably including the passcode to his account) to the imposter on the other end.

As Sultan v. Coinbase alleges, the plaintiff quickly lost 545 litecoins (worth around $100,000), presumably to the miscreant on the line. Because Coinbase failed to properly implement a two-factor authentication system and because Sultan never provided the accurate code, Coinbase, he argues, violated its duty to protect his assets.

“Coinbase was thus aware or should have been aware that its security measures were inadequate for its phone system, website, or exchange platform and thus, allowed and permitted the unauthorized transfer of within Coinbase user accounts to unauthorized wallets, including the litecoins which were owned by the Plaintiff and contained in his Coinbase user account,” Sultan argued in the complaint.

Another case, which has been assigned to a federal magistrate in Oakland, California, is a proposed class-action lawsuit filed by two men who say that bitcoins sent to them via Coinbase that they did not promptly claim should not continue to be retained by the website.

In the lawsuit, Faasse v. Coinbase, they argue that, when a Coinbase user attempts to send bitcoins (or other cryptocurrencies) to someone (like one of the plaintiffs, Timothy Faasse) who doesn’t already have an account, they receive an email with a link to accept those coins. However, that link times out after a certain period and the coins are never transferred.

Rather than have those coins continue to be held at Coinbase, they argue that under, California state law, the funds should be held by the state as “unclaimed property,” which could give Faasse and others the chance to reclaim it.

“Imagine writing a cashier’s check to a friend. The bank withdraws funds from your account, but your friend never cashes the check,” the civil complaint argues. “Does the bank get to keep the funds? The law clearly says ‘no.’ But this is exactly what has happened with cryptocurrencies sent through Coinbase.com, owned and operated by Coinbase, Inc.”

A third case, Berk v. Coinbase, which was also filed in the Northern District of California, claims that Coinbase staffers had advance knowledge that the company was going to allow Bitcoin Cash (BCH) trading before it was publicly known, thereby driving up the price.

“To date, the Company has not publicly denied that in fact insider trading occurred or the results of the purported internal investigation,” the lawsuit claims.

Coinbase was not willing to speak to Ars on the record about these new cases.

https://arstechnica.com/?p=1269649