Coinbase Investigates Possible Insider Trading Before Bitcoin Cash Announcement

21 December, 2017, 00:39 | Author: Bridget Leonard
  • Bitcoin Cash makes waves as it becomes available on Coinbase – and then halts trading

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.

Trading in bitcoin cash will be suspended until 1200 ET (1700 GMT) today, a Coinbase status page showed.In a blogpost, Coinbase said it suspended trading in Bitcoin Cash because of significant volatility. "Factors we considered include developer and community support, security, stability, market price and trading volume".

Users will be credited an amount of Bitcoin Cash equal to their Bitcoin balance.

With the issues related to the transaction time of the actual crypto-currency, Bitcoin Cash was introduced in the month of August, which differed slightly from Bitcoin itself.

News that Youbit, a South Korean exchange, halted trading and its operator Yapian, filed for bankruptcy on Tuesday after it said it was hacked, rocked the cryptocurrency boat. From a cursory glance, it looked like someone knew about the Coinbase move in advance, triggered a flurry of trading that led to a spike in price, and took advantage of this for a massive windfall.

"It appears the price of Bitcoin Cash on other exchanges increased in the hours before our announcement".

As of press time, BCH is trading at roughly $3,270 on GDAX, compared to $3,353 on Bitfinex and $4,251 on South Korea-based Bithumb.


The Coinbase launch was a huge boon for Bitcoin Cash investors, but it didn't come without its share of controversy.

"All Coinbase employees and contractors were explicitly prohibited from trading Bitcoin Cash and from disclosing our launch plans over a month ago". One, knowing that Coinbase is adding the support for BCH, could have bought BCH in huge quantity on other exchanges.

Something similar happened yesterday when Coinbase finally added Bitcoin Cash to the platform. Given the price increase in the hours leading up the announcement, we will be conducting an investigation into this matter.

Trade of Bitcoin Cash was frozen just four minutes after it began on the firm's Global Digital Asset Exchange (Gdax) and existing orders were cancelled.

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 was the third biggest cryptocurrency with a total market capitalization of $59bn, according to Coinmarketcap.

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