Coinbase Suspends Bitcoin Cash to Investigate Insider Trading

Coinbase Suspends Bitcoin Cash to Investigate Insider Trading

Trading was halted abruptly last night after bitcoin cash, which broke away from the main bitcoin blockchain last month, was listed on GDAX.

On Tuesday, the largest U.S. cryptocurrency exchange made an unexpected announcement that it was adding support for the Bitcoin offshoot, which came into existence via a hard fork that occurred on the legacy BTC blockchain on August 1.

Bitcoin cash was created as an offshoot of the original bitcoin in August. Now, an investigation is underway.

Suspicions arose when the price of Bitcoin Cash arrived at $8,500 on Coinbase-affiliated exchanges while being around $3,500 on all others. Armstrong wrote, "If we find evidence of any employee or contractor violating our policies-directly or indirectly-I will not hesitate to terminate the employee immediately and take appropriate legal action".

Charlie Lee denied any connection, stating he only sold for convenience. Coinbase said they had been monitoring the Bitcoin Cash network over the last few months and thus made a decision to support BCH including the ability to buy, sell, send and receive.

Note the increased volume on December 18, 2017, and the price increase in the BCH/USD trading pair (again, ahead of the Coinbase/GDAX announcement). This also had it canceling all resting orders and clearing order books for Bitcoin Cash.

Due to the unique position of Coinbase as a leader in cryptocurrency trade, there has been outcry over whether insider trading has occurred leading up to the introduction of Bitcoin Cash.

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There are no known rules on insider information for cryptocurrencies, but the community is buzzing with discontent, especially as crypto coins are becoming mainstream and any blow to their reputation may have widespread repercussions. Attempts to contact the creators of bitcoin cash were unsuccessful.

Users who had Bitcoin in Coinbase at the moment of the fork will now see their Bitcoin Cash in their Coinbase account.

"We've had a trading policy in place for some time at Coinbase".

An internal investigation has been launched to look into whether employees have complied with company policies.

"I take the confidentiality of material non-public information very seriously as CEO".

Which brings us to Wednesday morning, when Bitcoin Cash trading resumed on Coinbase and GDAX.

He added, "Our launch of Bitcoin Cash today is no exception to this". Further, one of the biggest exchanges supporting Bitcoin Cash leads to the assumption that prices of the cryptocurrency would rise in the future.

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