Coinbase halts Bitcoin Cash transactions over insider trading fears
- Author: Joey Payne Dec 21, 2017,
Dec 21, 2017, 0:37
Coinbase, a provider of digital wallets and trading services for crypto-currencies, said on December 20 it was investigating possible insider trading by employees and contractors after the price of bitcoin cash surged hours before the company announced it was adding the digital currency to its platform. "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 Coinbase CEO, Brian Armstrong.
Trading in bitcoin cash will be suspended until 1200 ET on Wednesday, according to Coinbase's status page. Historically, the price trend of bitcoin has had an inverse relationship with the short-term performance of alternative cryptocurrencies.
"It appears the price of Bitcoin Cash on other exchanges increased in the hours before our announcement".
There have been many changes in the industry, but this divergence would offer each and everyone the same amount of Bitcoin cash that they had in the virtual currency.
Quartz has asked Coinbase for an explanation for the trading suspension.
Coinbase Investigates Suspicions of Insider Trading for Bitcoin Cash
The drop comes after one of the largest crypto trading platforms, Coinbase, launched and then suspended trading in bitcoin cash - a spin-off of bitcoin.
Armstrong notes that Coinbase has strict confidentiality policies and doesn't allow for insider trading.
Smooth trading aside, the situation sparked controversy following allegations that insider trading may have occurred ahead of the BCH market launch on Coinbase. The fact that the price of the cryptocurrency was rising in the hours before the announcement could be a sign that people were trading based on insider knowledge.
The company had apparently banned employees and their family and friends from trading in Bitcoin Cash more than a month before the launch. Once paused, we cancelled resting orders and cleared all BCH order books.