Insider Trading Probe Launched After Bitcoin Cash Increases Suddenly

Steve Phelps
December 21, 2017

In a blog post on the company website, Armstrong voiced concerns that the price of Bitcoin Cash (BCH) on other exchanges increased in the hours before the Coinbase announcement. "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".

While Coinbase briefly enabled orders to be posted in U.S. dollars on its platform for more sophisticated traders, it suspended the facility after two minutes due to 'significant volatility, ' the company said in a blog post.

Coinbase is one of the US's largest digital currency exchanges, and it has recently been landed in hot water as market-watchers accuse it of illegal activity via social media. Coinbase is alleging that one of its employees leaked the company's move to introduce cash as a spin-off of the original coin.

Back in August, the bitcoin blockchain "forked" when supporters could not agree on potential changes to the size of Bitcoin blocks.

However, many exchanges, including Coinbase, initially refused to support the innovation, casting doubt on its prospects. 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. Even with futures trading and tighter regulation in place to add some stability, virtual money still tends to be volatile - it doesn't take much to create havoc.

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Just four minutes after the trading of Bitcoin Cash on Global Digital Asset Exchange (GDAX) had started it was closed and the previous orders were instantly rejected.

Pic: Getty ImagesOne of the US's leading crypto-currency exchanges is carrying out an insider trading investigation.

The sharp drop earlier today it seems was caused by news that Coinbase - one of the world's largest cryptocurrency exchanges - made a decision to open up its doors to bitcoin cash trading.

"Who held a Bitcoin balance on Coinbase at the time of the fork will now see an equal balance of Bitcoin Cash available in their Coinbase account". CEO Brian Armstrong wrote in a separate post that the company would investigate whether staff or contractors had acted on "material non-public information"-basically, insider trading".

Bitcoin Cash was the third biggest cryptocurrency with a total market capitalization of $59bn, according to Coinmarketcap. This also had it canceling all resting orders and clearing order books for Bitcoin Cash.

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