By Steve Dellar  |  12-20-2017   News
Photo credit: Dimarik16 | Dreamstime

One of the largest Cryptocurrency exchange platforms, Coinbase, said it was launching an insider trading investigation in its own organization after problems arose with the launch of Bitcoin Cash.

In a surprise decision, the San Francisco based firm Coinbase started to let its clients buy and sell Bitcoin Cash yesterday but stopped trading four minutes after it went live.

<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">Coinbase to Probe for Insider Trading Breach in Bitcoin Cash Listing <a href="https://t.co/yWLtTa5WWO">https://t.co/yWLtTa5WWO</a> <a href="https://t.co/WctJHc25AS">pic.twitter.com/WctJHc25AS</a></p>&mdash; CoinDesk (@coindesk) <a href="https://twitter.com/coindesk/status/943469538577928192?ref_src=twsrc%5Etfw">December 20, 2017</a></blockquote>

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There were widespread social media accusations that employees of Coinbase tipped off others in advance of the news of the launch. Just before being launched, 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.

CEO Brian Armstrong: "It appears the price of Bitcoin Cash on other exchanges increased in the hours before our announcement."

"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."

<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">Incredible screenshot of <a href="https://twitter.com/hashtag/gdax?src=hash&amp;ref_src=twsrc%5Etfw">#gdax</a> order book for <a href="https://twitter.com/hashtag/bitcoincash?src=hash&amp;ref_src=twsrc%5Etfw">#bitcoincash</a> <a href="https://t.co/ZbAUikLybt">pic.twitter.com/ZbAUikLybt</a></p>&mdash; CryptoBuzz™ (@cryptobuzznews) <a href="https://twitter.com/cryptobuzznews/status/943281233726816256?ref_src=twsrc%5Etfw">December 20, 2017</a></blockquote>

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This, of course, hits home with one of the major problems that all cryptocurrencies are now facing, the lack of regulation. Even if Mr Armstrong would be able to somehow prove that one or several of his employees had forewarned colleagues of friends of the impending launch and had thus drove the price up (which would not be surprising), as there is no legal surrounding or regulatory defense, no laws have been broken at this point.

When Coinbase launched Bitcoin Cash at 17:20 PST (01:20 BST) it was valued at about $3,500 per coin. At the time it suspended it, according to the data made available 4 minutes later, the price had gone up to about $8,500, or a 250% price rise within 240 seconds.

It remains unclear whether or not this was a software glitch or if deals were really being made at this level. Bitcoin Cash is currently the world's third-biggest crypto-currency with a total market capitalization of about $59bn.

In comparison, at current market capitalization, Ethereum is worth $77bn whilst the original Bitcoin stands at $282bn.

Source:

http://www.bbc.com/news/technology-42425857

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