Coinbase Investigates Insider Trading Following Launch Of Bitcoin Cash

Classic Bubble Price Action Source Dr. Jean Paul Rodrigue Dept. of Global Studies and Geography Hofstra University

In a follow up post on Wednesday, Coinbase CEO Brian Armstrong acknowledged that the price of Bitcoin Cash had increased before the announcement that the platform would allow trading. Until yesterday, Coinbase only participated in three markets - Bitcoin, Ethereum, and Litecoin.

However the core Bitcoin developers disagreed with the proposed changes, so a group chose to copy and modify Bitcoin's code to create Bitcoin cash. Armstrong wrote, "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".

"We have been monitoring the Bitcoin cash network over the last few months and have chose to enable full support including the ability to buy, sell, send and receive", Coinbase said in its announcement via a blog post.

At the same time, Bitcoin prices fell almost 15 percent to as low as $15,000 on Tuesday before the announcement. For instance, Coinbase and GDAX often trade Bitcoin itself higher than other exchanges.

Bitcoin Cash first surfaced online back in August when a group of developers "forked" the Bitcoin blockchain. Attempts to contact the creators of bitcoin cash were unsuccessful.




The price of bitcoin has dropped sharply during European trading early Wednesday following a series of troubling developments for the cryptocurrency in recent days.

Which brings us to Wednesday morning, when Bitcoin Cash trading resumed on Coinbase and GDAX.

Coinbase maintains a strict trading policy and internal guidelines for employees. An account for Whalepool, which describes itself as a community of day traders focused mainly on bitcoin and other cryptocurrencies, commented, "Very odd accumulation and pump on Bcash in the hours leading up to the @Coinbase BCH add". Morgan Stanley analysts estimate more than $630 million in bitcoin has been stolen from cryptocurrency exchanges by hackers, according to a Monday report.

Just hours later, however, the site suspended trading after bitcoin cash's price spiked, prompting concerns about possible insider trading by people who had been briefed about the announcement. As smaller miners become overburdened financially, they turn to Bitcoin Cash, or the "second Bitcoin", analysts say.

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