Coinbase Investigating Possible Insider Trading of Bitcoin Cash

Coinbase Investigating Possible Insider Trading of Bitcoin Cash

Coinbase Investigating Possible Insider Trading of Bitcoin Cash

The CEO of Coinbase, the biggest USA cryptocurrency exchange, said the company is conducting an investigation into unusual trading activity that preceded its distribution of Bitcoin Cash on Tuesday evening.

Trading in bitcoin cash will be suspended until 1200 ET (1700 GMT) Wednesday, a Coinbase status page showed.

Coinbase users have always been calling for the platform to add Bitcoin Cash, now the world's third-biggest cryptocurrency, to its roster after it initially shunned the launch of the offshoot cryptocurrency in August. But the company said action was too volatile and it temporarily shut down trading and cleared all orders.

Here's what the bitcoin cash price looks like on Coinmarketcap, which takes a volume-weighted average of bitcoin cash prices from 150 exchanges. The announcement seemed to trigger a flood of cash from bitcoin to Bitcoin Cash, which surged 50 percent overnight. Even with futures trading and tighter regulation in place to add some stability, virtual money still tends to be volatile - it doesn't take much to create havoc.

Coinbase, one of the world's biggest digital currency exchanges, on Wednesday, announced Bitcoin Cash support, allowing customers to buy, sell, send and receive this "hard-fork" of Bitcoin. As noted by its co-founder and CEO, "Given the price increase in the hours leading up the announcement, we will be conducting an investigation into this matter".

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Armstrong also emphasised that he had told Coinbase employees through several channels that they were prohibited from trading bitcoin cash in the weeks leading up to its launch on GDAX. One, knowing that Coinbase is adding the support for BCH, could have bought BCH in huge quantity on other exchanges.

As Bitcoin Cash prices on the Coinbase exchange soared in value, the company moved to restrict orders before taking the whole service offline as liquidity dried up. Prior to the public announcement, Bitcoin Cash prices were already surging.

In a statement earlier today, CEO Brian Armstrong wrote that the company would investigate whether any employees had traded on the pre-public news.

Bitcoin Cash is now the world's third biggest crypto-currency with a total market capitalisation of about $59bn, according to Coinmarketcap.

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