Coinbase Probes Employees for Insider Trading Following Launch of Bitcoin Cash Support
Coinbase is conducting an internal probe of its employees amid allegations that they profited from insider trading ahead of the planned launch of bitcoin cash (BCH) on the popular exchange.
Coinbase Conducts Probe
It didn’t take long for Coinbase to respond to allegations from the blockchain community that its employees were involved in shady dealings ahead of the platform’s planned launch of bitcoin cash. Shortly after the launch, the value of bitcoin cash spiked to $8,500 on the GDAX exchange. That was nearly three times higher than the $3,500 price point on all other exchanges. In theory, Coinbase’s employees could have purchased bitcoin cash on other exchanges knowing it would soon be available on GDAX.
With the addition of BCH, Coinbase now supports four cryptocurrencies, with the other three being bitcoin, Ethereum and Litecoin.
Coinbase, which supports more than 13 million active users, says it prohibited trading of BCH for several weeks. The company issued the following statement via Twitter on Dec. 19:
“Coinbase maintains a strict trading policy and internal guidelines for employees. Coinbase employees have been prohibited from trading in Bitcoin Cash for several weeks.”
The tweet has since generated nearly 2,000 responses.
Co-founder Brian Armstrong also spoke about the company’s employee trading policy in a Dec. 20 blog post. He claims that employees are prohibited from trading on “material non-public information.” This includes a strict ban on communication of material non-public information outside the firm. Armstrong says the recent launch of bitcoin cash “is no exception to this.”
“All Coinbase employees and contractors were explicitly prohibited from trading Bitcoin Cash and from disclosing our launch plans over a month ago,” Armstrong said. “This was communicated multiple times via multiple channels to employees.”
At the time of writing, Coinbase has yet to conclude its internal investigation.
BCH Price Levels
The value of bitcoin cash surged nearly 40% on Wednesday, reaching a session high of $3,766.68. At press time, BCH/USD was valued at $3,703, having gained more than $1,000 on the day. This gives BCH a total market cap of $65.3 billion, which is third highest among active cryptocurrencies.
Trade volumes over the past 24 hours surpassed $10 billion, according to CoinMarketCap. South Korean trading desks saw the biggest turnover of BCH on Wednesday. Bithumb processed nearly 16% of daily transactions via BCH/KRW. Bitfinex saw 11% of the daily volume.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.