Coinbase Suspends Bitcoin Cash to Investigate Insider Trading

Coinbase Suspends Bitcoin Cash to Investigate Insider Trading

Coinbase, one of the most popular U.S. cryptocurrency exchanges, is adding bitcoin cash to its offerings, giving momentum to a rival to the most popular digital unit. In the hours before Coinbase added Bitcoin Cash to its exchange, the price of the cryptocurrency had already begun to rise.

Smooth trading aside, the situation sparked controversy following allegations that insider trading may have occurred ahead of the BCH market launch on Coinbase.

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

Abbreviated as BCH, the currency showed Cash prices at roughly $8,500, or almost three times higher than the value it commands on other exchanges (Coinmarketcap has it at $3,381 at the time of writing).

Bitcoin is facing a major threat as a cloned cryptocurrency that shares its name and many of its key features launched on one of the largest cryptocurrency exchanges, sending Bitcoin prices tumbling.

"It appears the price of Bitcoin Cash on other exchanges increased in the hours before our announcement", he said, via Medium.

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"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", wrote CEO Brian Armstrong in a blog post Wednesday (20 December).

Coinbase had initially stated it would not support Bitcoin Cash, however, it reversed this decision within weeks.

Cryptocurrency hard fork Bitcoin Cash was created back in August as the result of a "hard fork" of Bitcoin itself.

This week's Bitcoin Cash debacle is just the latest example of the volatility and mistrust that continues to plague digital currency markets even as millions of ordinary people are rushing to invest.

A suspicious activity on the Bitcoin Cash markets has caused Coinbase to suspect some insider information on the recent launch of BCH order books on GDAX. Bitcoin Cash is now the third largest cryptocurrency in terms of market capitalization, sitting at more than $29 billion compared to bitcoin's more than $294 billion. While the opening CME futures price pointed to prices in excess of $20,000 early next year, the January 2018 contract traded as low as $16,435 Wednesday.

In theory, Coinbase's staff, who were in the know that it was about to add Bitcoin Cash to its exchange, could have profited by buying the cryptocurrency on other exchanges.

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