Cryptocurrency exchange startup Coinbase has announced it will commence an investigation into whether any employees may have violated its insider trading rules in the run-up to its surprise listing of bitcoin cash yesterday.
The news follows widespread social media accusations that suggest employees may have moved to tip off others in advance of the news. As profiled by CoinDesk, 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.
In a blog post, CEO Brian Armstrong addressed allegations head on, making public an exchange policy indicating that employees are barred from trading ahead of listings that may influence cryptocurrency markets.
It's notably not the first time that price movements have appeared to anticipate moves by the exchange to list new cryptocurrencies.
Ahead of its Aug. 23, 2016 listing of litecoin, for example, prices of the cryptocurrency began rising at least a day in advance, according to data from Coinmarketcap. Coinbase lists only four assets on its GDAX exchange, offering order books for bitcoin, ether, litecoin and bitcoin cash.
Still the move to list bitcoin cash was unique, as it effectively gave all customers of Coinbase's GDAX exchange an amount of bitcoin cash equal to the amount of bitcoin they held on the exchange at the time the new cryptocurrency network was created. Just minutes after making funds available, however, the future was abruptly pulled.
Coinbase has indicated it will seek to relaunch bitcoin cash trading later today.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase.
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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.