On December 20, employees and contractors of Coinbase, the world’s largest bitcoin brokerage and wallet platform, were accused by many members of the bitcoin community for insider trading.
Abrupt Bitcoin Cash Price Surges Occurred in the Past
Amongst the many critics was George Kikvadze, the vice chairman at Bitfury, who described the sudden surge in the price of Bitcoin Cash (BCH) moments prior to the integration of BCH by Coinbase as a “very shady move.”
“Coinbase and GDAX: VERY SHADY MOVE. Market anticipates Bitcoin Cash release January 1, 2018. Bitcoin Cash pumped massively on inside knowledge (no other name for this) prior to [the listing of Bitcoin Cash by GDAX]. GDAX abruptly lists Bitcoin Cash 2 weeks before January 1st. Something very wrong just happened.”
However, in the past, the price of Bitcoin Cash has had surged massively on several instances, which was unexpected by the market and investors. On November 10, the price of Bitcoin Cash abruptly surged by nearly 40 percent, as the price of bitcoin declined from nearly $8,000 to below $7,000.
Hence, it remains unsure whether the abrupt surge in the price of Bitcoin Cash was caused by employees of Coinbase or investors familiar with the GDAX Bitcoin Cash integration initiating in insider trading or it was merely a short-term price surge.
Coinbase CEO Responds
Brian Armstrong, the CEO of Coinbase and GDAX, stated:
“Today we announced support for Bitcoin Cash (BCH). It appears the price of Bitcoin Cash on other exchanges increased in the hours before our announcement. While digital currency prices fluctuate quite a lot and we have no indication of any wrongdoing at this time, I wanted to share a few thoughts with our customers.”
Armstrong added that for many years, Coinbase has had a policy in place that prevents employees, their families and friends from trading cryptocurrencies on material nonpublic information. If an employee or a close individual to the employee initiate insider trading based on the exchange’s confidential information, it would be considered illegal. He further emphasized:
“We’ve had a trading policy in place for some time at Coinbase. The policy prohibits employees and contractors from trading on ‘material nonpublic information,’ such as when a new asset will be added to our platform. In addition to trading restrictions, it prohibits communication of material nonpublic information outside the company. This includes to friends and family.”
To its investors, users, and the cryptocurrency community, Armstrong stated that the company will launch a full investigation into the issue and whether insider trading was initiated based on the plans of GDAX to integrate Bitcoin Cash. Armstrong firmly stated that the company will not hesitate to terminate the contracts and pursue legal action against employees who have traded based on insider knowledge.
“Given the price increase in the hours leading up the announcement, we will be conducting an investigation into this matter. 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.”
Featured image from Flickr/TechCrunch.
Last modified: March 4, 2021 5:02 PM