Bitcoin Cash: Scandal erupts as Coinbase investigates claims of insider trading

Bitcoin Cash: Why the rival cryptocurrency has sent Bitcoin's price plummeting

However, after going live for only four minutes (via its GDAX exchange), Coinbase halted trading of bitcoin cash.

GDAX, the digital asset exchange run by Coinbase, has resumed trading of bitcoin cash hours after its initial - and tumultuous - effort to launch a market for the breakaway cryptocurrency.

Cryptocurrency hard fork Bitcoin Cash was created back in August as the result of a "hard fork" of Bitcoin itself. Now, an investigation is underway.

CEO of Coinbase, Brian Armstrong, addressed the issue in a blogpost: "Given the price increase in the hours leading up the announcement, we will be conducting an investigation into this matter".

Charlie Lee denied any connection, stating he only sold for convenience.

Armstrong said that all Coinbase employees and contractors were "explicitly prohibited" more than a month ago from trading in bitcoin cash and from revealing launch plans.

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).

Coinbase has revealed it is investing a possible instance of insider trading related to Bitcoin Cash. Analysts attributed the plunge to an influx of funds to Bitcoin Cash.


In a post on Medium, he elaborated: "We've had a trading policy in place for some time at Coinbase".

The US Securities and Exchange Commission suspended trading temporarily in The Crypto Company, a US based cryptocurrency consultancy, amid concerns over stock manipulation, according to CNBC.

As of Wednesday morning ET, the ability to buy or sell Bitcoin Cash remained disabled on Coinbase, though customers could transfer it to other digital currency wallets. This announcement caused sharp market moves and the company is now investigating the price spikes for any evidence if employees violated the company's trading policies.

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

He added, "Our launch of Bitcoin Cash today is no exception to this".

This means that people who had Bitcoin at the moment of the fork also owned the same amount of Bitcoin Cash.

Armstrong further explains that these prohibitions were communicated through "multiple channels", including emails and Q&A sessions. Given the nature of cryptocurrencies, it is unlikely that there is any way to prove that insider trading has occurred.

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