Coming from a fork on August 1, 2017, Bitcoin Cash has experienced tremendous growth. This growth accelerated in recent days, going so far as to rank BCH among the most capitalized cryptocurrencies. But this recent rise could be linked to insider trading, which led the CEO of Coinbase to open an investigation.
Coinbase suspected of insider trading
Bitcoin Cash is reported to have recently regained interest in lower transaction times than Bitcoin. However, what could especially have boosted the value of the BCH is its arrival on the trading platforms Coinbase and GDAX.
Some observers associate this incredible price surge (the BCH has even been posted at $ 9,000 on GDAX!) To insider trading regarding the addition of this currency on both twin platforms. Many voices have been raised on this topic on Twitter.
"No matter how you consider it, this is an INSIDER RATE! Someone had a bunch of Bitcoin and knew that Coinbase was going to add BCH and got away with this #flippening with a BIG profit. Whoever you are, you are passing cryptos for Wall Street. Shame on you. "
"Hey @coinbase, @GDAX and Brian Armstrong, by committing to being part of an indexed product for CME, you accept certain rules. Since news on BCH has clearly leaked around 2:30 CST, we can talk about insider trading. I hope you appreciate the complaints that are coming. "
Some Coinbase employees are accused of buying BCH just before the company announces the addition of the currency on its platform and that of GDAX.
The assumption of insider trading has also been magnified by the sudden rise in the value of the BCH shortly before the announcement, and then flamed once the announcement made.
Brian Armstrong raises his voice
Faced with this embarrassing situation for his company, CEO Brian Armstrong quickly reacted on the official blog of Coinbase.
"We have a trading policy in place for some time at Coinbase. The policy prohibits employees and subcontractors from exchanging currencies subject to "non-public material information", for example when a new asset is added to our platform. In addition to trader bans, it is also forbidden to communicate non-public material information outside the company. Brian Armstrong
In order to show good faith, Armstrong announced that an investigation was underway to determine where the possible leak could come from.
"Given the rise in prices in the hours leading up to the announcement, we will investigate this matter. If we find evidence that an employee or contractor is violating our policies - directly or indirectly - I will not hesitate to fire him immediately and take appropriate legal action. Brian Armstrong
While waiting to see the results of the investigation, Coinbase has decided to suspend the Bitcoin Cash transactions on its platform.
So is it even safe to use coinbase at this point?
I wouldn't hold anything on coinbase for longer than it takes to transfer to or from a bank account and under the $20,000 per transaction auto-report-to-IRS amount.