Coinbase Freezes Bitcoin Cash Trades, Launches Insider Trading Probe

Dec 22, 2017, 00:57
Coinbase Freezes Bitcoin Cash Trades, Launches Insider Trading Probe

On Tuesday, the largest USA cryptocurrency exchange made an unexpected announcement that it was adding support for the Bitcoin offshoot, which came into existence via a hard fork that occurred on the legacy BTC blockchain on August 1. The platform suspended trading of Bitcoin Cash after its value soared from $3,000 a coin to more than $8,500 a coin within an hour.

Bitcoin Cash prices surged to almost $9,000 on Tuesday prior to the announcement going live.

Bitcoin is facing a major threat as a cloned cryptocurrency that shares its name and many of its key features launched on one of the largest cryptocurrency exchanges, sending Bitcoin prices tumbling. On the other hand, Bitcoin's price fell as much as 25% to a low of $14,000, soon after the announcement.

This week's launch of Bitcoin futures on the Chicago Mercantile Exchange (CME) has done little to calm the recent volatility in the price of BTC with prices in the cash market trading in a $4,000 range in the last three days.

Armstrong warned, "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".

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Coinbase's ethics policy prevents employees from "trading on 'material non-public information, ' such as when a new asset will be added to our platform", wrote Coinbase CEO Brian Armstrong in a Medium post today.

Cryptocurrency hard fork Bitcoin Cash was created back in August as the result of a "hard fork" of Bitcoin itself. The second coin has been implemented to better handle some of the shortcomings of Bitcoin such as ever-growing transaction fees and confirmation times. "Factors we considered include developer and community support, security, stability, market price and trading volume".

Coinbase did allow some trades for bitcoin cash on Tuesday.

He added that Coinbase will be conducting an investigation. Bitcoin Cash is now the third-largest cryptocurrency on the market, boasting a total market capitalisation of $57.5 billion. In contrast, bitcoin cash skyrocketed over 60 percent on the news, to near all-time highs of $3,450. All customers 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.