Coinbase halts Bitcoin Cash transactions amidst accusations of insider trading
- Author: Ronnie Bowen Dec 22, 2017,
Dec 22, 2017, 0:56
Coinbase CEO Brian Armstrong published a statement acknowledging the situation and attempting to allay suspicion: "All Coinbase employees and contractors were explicitly prohibited from trading Bitcoin Cash and from disclosing our launch plans over a month ago".
Leading U.S. cryptocurrency platform Coinbase added trading for bitcoin cash this week, in a rocky rollout that shows the growing pains of the digital currency exchange industry.
Users that held Bitcoin in their Coinbase accounts on August 1, 2017, will be credited with an equal amount of Bitcoin Cash coins. Now, an investigation is underway.
In the lead up to Coinbase announcing support for BCH, it appears that the price of BCH increased substantially on other exchanges.
Armstrong said he will not hesitate to terminate any employees who violated company policies.
Charlie Lee denied any connection, stating he only sold for convenience.
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Buy and sell orders for Bitcoin Cash on Coinbase have been temporarily suspended due to high website traffic but are expected to reopen as soon as possible.
Price spikes after major announcements are the norm in financial circles.
"Once paused, we cancelled resting orders and cleared all BCH order books", explained GDAX. Coinbase has now launched a probe into the accusations of insider trading. Analysts attributed the plunge to an influx of funds to Bitcoin Cash.
"We've had a trading policy in place for some time at Coinbase".
Coinbase maintains a strict trading policy and internal guidelines for employees.
Coinbase confirmed that users will be able to buy Bitcoin Cash using all of its supported fiat currencies: USD, EUR, GBP, CAD, AUD, and SGD. Coinbase's Bitcoin Cash announcement on Tuesday seemed to steal the wind behind other cryptocurrencies, as values for Bitcoin, Ethereum, and Litecoin dropped at around the same time. In addition to trading restrictions, it prohibits communication of material non-public information outside the company. This was communicated multiple times via multiple channels to employees. As smaller miners become overburdened financially, they turn to Bitcoin Cash, or the "second Bitcoin", analysts say. 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.