Coinbase or as the founder calls it “Gmail for Digital currency”, had filed an inquiry in December 2017 regarding BCH. The exchange firm was looking into the matter of whether its employees were carrying malpractices for the trading of Bitcoin Cash during its listing on GDAX.
On 24th July, Fortune reported that no internal trading was carried by Coinbase employees, the investigation has been resolved and none are at fault.
Coinbase had filed an investigation during the sudden surge in the price of BCH before the announcement of it being the new asset up for trading on its platform. Considering that BCH is an offshoot of the original cryptocurrency king, Bitcoin, the surge seemed reasonable. Although it was speculated to be indulged in malpractices of trading and surging the coin before its listing.
The surge gave BCH a trader base of over millions who earlier had no idea about its trading or investment. This sudden rise in price, as well as an increase in clientele preceding the official announcement, questioned the ethics of Coinbase employees.
As observed on 19th December, Bitcoin Cash had an opening price of $2,199 while its highest was at $2,918. Under 24 hours, BCH surged and almost doubled its highest price point of the day at $4,355.
The entire scenario of Coinbase and BCH was a mystery to the market, considering that BCH prices rose due to the unexpected announcement made by Coinbase about its trading on GDAX exchange.
The BCH trading was paused in a while, as it was restricted by GDAX. After an hour, the orders were cleared and the BCH market was taken offline from GDAX.
Recently, Fortune inquired Coinbase regarding the insider trading last year. The team stated that the investigation concluded last week.
A spokesperson for Coinbase said:
“We would not hesitate to terminate an employee or contractor and/or take appropriate legal action if evidence showed our policies were violated,”
To state that the investigation has found no flaw and no insider trading had taken place, the spokesperson for Coinbase further said:
“We can report that the voluntary, independent internal investigation has come to a close, and we have determined to take no disciplinary action.”
Coinbase in the initial stages of BCH declined its listing on their platform and decided not to allocate or support the so-called fork of Bitcoin blockchain. The company advised BCH users to move their coins elsewhere if they needed a BCH compatible platform. Nevertheless, Coinbase switched its opinions and declared trading of BCH from 1st January 2018. For unknown reasons, Coinbase made an unexpected move and started the trading of BCH earlier than declared.
A few hours before the unexpected move of Coinbase trading BCH, the price of Bitcoin Cash surged. The speculations were that Coinbase employees started investing in BCH before the announcement of listing which increased the demand for BCH. As the market works on the basis of demand and supply, the demand increased while supply remained constant for the time being. Eventually resulting in a price hike of Bitcoin Cash.
Brian Armstrong, the CEO of Coinbase responded to the questions raised about the ethics of its employees by publishing a strong-voiced post on its blog forum. He stated:
“Given the price increase in the hours leading up the announcement, we will be conducting an investigation into this matter”
He further spoke about carrying out an investigation and said:
“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.”
Back then, BCH was traded in thousands of dollars and was ranked #3 among the other cryptocurrencies. At the time of writing, BCH has a trading price of $848.44 and ranks #4 on the market chart list.
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