U.S. District Judge Vince Chhabria, Northern District of California. Photo: Jason Doiy/ALM

Coinbase will get a second at-bat this week as it attempts to avoid an insider trading lawsuit filed by investors over its currency exchange platform.

The investors' first attempt was thrown out by U.S. District Judge Vince Chhabria of the Northern District of California in October because the complaint did not provide a legal basis for its claims. The amended complaint, though, seeks to get past the initial hurdle by adding more plaintiffs and building on allegations that Coinbase intentionally lowered the price of bitcoin cash ahead of the launch to allow company insiders to reap the windfalls when its price reportedly surged 200 percent after trading began.

Thursday's hearing pits Robert Green of Green & Noblin and Lynda Grant of The Grant Law Firm for the investors against Coinbase's defense team from Keker, Van Nest & Peters.

Keker partner Steven Ragland declined to comment on behalf of his client. Lawyers for the plaintiffs didn't immediately respond to messages.

This amended complaint argues that Coinbase has not adequately dispelled reports of insider trading, nor answered why the company decided to launch the trading service without alerting the market beforehand.

The cryptocurrency traders cite the balance test in California's Unfair Competition Law to allege that Coinbase acted unfairly when it strayed from its promises to users to not roll out bug-ridden features compromising the marketplace, and failed to consider its own employees' “ulterior motives.”

The new complaint specifically claims Coinbase's purported conflicts of interest include functioning as a broker-dealer while making proprietary trades and allowing employees with access to customer information and currency listings to buy and sell on bitcoin cash platforms.

For those new to this saga, bitcoin cash was created last year in a so-called “hard fork” of the bitcoin blockchain—or the creation of a variant of the original software.

Chhabria was admittedly struggling to keep up with the case the first time around while still poking holes in the insider trading complaint for missing key details, like the actual basis for claims of insider trading. Keker's Ragland said during the hearing on Coinbase's prior motion to dismiss that the words “pump-and-dump” never appeared in the complaint, and that plaintiff's counsel were leveling all kinds of new claims inappropriately.

One thing to watch is whether Chhabria feels more comfortable in the world of blockchain and cryptocurrency his second time around.

“Intuitively, it seems like this is something that was bungled, but I don't know how well the complaint explains again why it was bungled and what the motivations were?” Chhabria said during that September hearing. “It may be because this is a new world, a new area that we judges don't know as much about as we know trading stocks at Charles Schwab.”