Bitcoin Cash comes to Coinbase with suspicions of insider trading
Surging values lead to investigation of employeesBy Greg Synek
Bitcoin underwent a hard fork earlier this year causing the creation of Bitcoin Cash. The second coin has been implemented to better handle some of the shortcomings of Bitcoin such as ever-growing transaction fees and confirmation times.
As one the largest portals into the world of cryptocurrency, Coinbase offers the ability to buy and sell digital currencies for fiat money. In addition to Bitcoin, Litecoin and Ethereum, Coinbase now also supports Bitcoin Cash. Users that held Bitcoin in their Coinbase accounts on August 1, 2017, will be credited with an equal amount of Bitcoin Cash coins.
Due to the unique position of Coinbase as a leader in cryptocurrency trade, there has been outcry over whether insider trading has occurred leading up to the introduction of Bitcoin Cash. Immediately following the launch of Bitcoin Cash on Coinbase, the price shot up over 50 percent.
According to CEO and co-founder Brian Armstrong, employees were warned numerous times that any trading of Bitcoin Cash leading up to the launch would result in serious actions being taken, possibly including termination and legal action.
"All Coinbase employees and contractors were explicitly prohibited from trading Bitcoin Cash and from disclosing our launch plans over a month ago."
An internal investigation has been launched to look into whether employees have complied with company policies. Given the nature of cryptocurrencies, it is unlikely that there is any way to prove that insider trading has occurred. In the event that insider knowledge was used to obtain a profit, this event could also become a test of whether Bitcoin Cash will be treated the same way as traditional regulated securities.
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.