Coinbase, a provider of digital wallets and trading services for crypto-currencies, said on December 20 it was investigating possible insider trading by employees and contractors after the price of bitcoin cash surged hours before the company announced it was adding the digital currency to its platform.
Bitcoin cash is trading higher after a slate of announcements from Coinbase.
"It appears the price of Bitcoin Cash on other exchanges increased in the hours before our announcement".
Coinbase said earlier that customers who held a bitcoin balance at the time of the fork creating bitcoin cash August 1 will see an equal balance of the rival coin in their account. He also points out that this was stressed to employees in the month leading up to Bitcoin Cash's launch on the platform.
The largest United States cryptocurrency exchange, Coinbase, announced today that the company will begin support for Bitcoin Cash. The fact that the price of the cryptocurrency was rising in the hours before the announcement could be a sign that people were trading based on insider knowledge.
Coinbase had a policy that prohibited employees and contractors from trading Bitcoin Cash and disclosing launch information before the exchange made things official.
In a statement earlier today, CEO Brian Armstrong wrote that the company would investigate whether any employees had traded on the pre-public news. Just four minutes after enabling trading of the cryptocurrency on its Global Digital Asset Exchange (GDAX), Coinbase halted it. The new coin was created to be faster than its predecessor and was built on bitcoin's existing transaction history.
In a blog post, Coinbase said they considered "developer and community support, security, stability, market price and trading volume" when deciding to fully support the digital currency.
Coinbase stated: "Coinbase maintains a strict trading policy and internal guidelines for employees".
"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", said Armstrong in his blog.