Coinbase CEO, Brian Armstrong, released a blog entry today announcing his company was going to investigate possible insider trading of Bitcoin Cash prior to public trading of BC on Coinbase yesterday.
Although bitcoin cash was already rising steadily before Coinbase enabled trading of it last night, it was trading at a significant premium on the platform versus the rest of the market. "Coinbase employees have been prohibited from trading in bitcoin cash for several weeks".
On other exchanges, such as Kraken, bitcoin cash traded at about $3,600 on Wednesday.
Armstrong notes that Coinbase has strict confidentiality policies and doesn't allow for insider trading. The CEO said "will not hesitate" to immediately fire anyone shown to be trading on non-public info, and insisted that the company had repeatedly warned employees against the practice.
The popular trading platform is working on enabling bitcoin cash trading on its platform but is facing volatility troubles.
Bitcoin cash surged in the hours before the San Francisco-based company's announcement, while bitcoin prices tumbled the most in two months.
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The price of bitcoin cash rose rapidly, likely due to the announcement from Coinbase that it would allow it to be traded on its GDAX exchange.
"Given price increase in the hours leading up the announcement, we will be conducting an investigation into this matter".
Bitcoin cash was created after bitcoin forked in August, and bitcoin owners began receiving tokens-one bitcoin cash for each bitcoin they owned.
Armstrong says that his goal to to make Coinbase the easiest to use digital currency exchange that customers trust the most.
While Coinbase briefly enabled orders to be posted in US dollars on its platform for more sophisticated traders, it suspended the facility after two minutes due to "significant volatility", the company said in a blog post. However, at the time that happened, Coinbase didn't support the new cryptocurrency, so those who used the company's digital wallet didn't receive their tokens.
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