Cryptocurrency exchange startup Coinbase has announced it will commence an investigation into whether any employees may have violated its insider trading rules in the run-up to its surprise listing of bitcoin cash yesterday.
The news follows widespread social media accusations that suggest employees may have moved to tip off others in advance of the news. As profiled by CoinDesk, bitcoin cash set a new record of $2,500 earlier in the day’s trading, rising 21 percent by the early morning hours before hitting an all-time high above $3,700.
In a blog post, CEO Brian Armstrong addressed allegations head on, making public an exchange policy indicating that employees are barred from trading ahead of listings that may influence cryptocurrency markets.
Armstrong wrote:
“Given the price increase in the hours leading up the announcement, we will be conducting an investigation into this matter. 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.”
It’s notably not the first time that price movements have appeared to anticipate moves by the exchange to list new cryptocurrencies.
Ahead of its Aug. 23, 2016 listing of litecoin, for example, prices of the cryptocurrency began rising at least a day in advance, according to data from Coinmarketcap. Coinbase lists only four assets on its GDAX exchange, offering order books for bitcoin, ether, litecoin and bitcoin cash.
Still the move to list bitcoin cash was unique, as it effectively gave all customers of Coinbase’s GDAX exchange an amount of bitcoin cash equal to the amount of bitcoin they held on the exchange at the time the new cryptocurrency network was created. Just minutes after making funds available, however, the future was abruptly pulled.
Coinbase has indicated it will seek to relaunch bitcoin cash trading later today.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase.
Image via CoinDesk archieves
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https://www.coindesk.com/coinbase-probe-insider-trading-breach-bitcoin-cash-listing/
