A suspicious activity on the Bitcoin Cash markets has caused Coinbase to suspect some insider information on the recent launch of BCH order books on GDAX. At one point, a price anomaly listed Bitcoin Cash at $9,500 on Coinbase, as some managed to sell much higher than current market prices.
It turns out Coinbase had a confidential plan in place a month ago to launch Bitcoin Cash, and no information was leaked- until a few hours before the trading on GDAX and Coinbase started. Now, an investigation is underway.
"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," wrote the CEO of Coinbase Brian Armstrong.
The case landed Charlie Lee, former Coinbase director of engineering, into some hot water, as he managed to sell BCH at $5,000, more than double the recent market price.
Charlie Lee denied any connection, stating he only sold for convenience.
The spike in popularity of Bitcoin Cash coincides with more Bitcoin troubles, as a slide in price is combined with a congested network, and an inability to send without exorbitant fees.
And yet more and more skeptics believe it was the inside information, and not the intrinsic qualities of BCH, that made the price spike possible.
@coinbase@gdax VERY SHADY MOVE 1) Market anticipates BCash Release Jan 1, 2018 2) BCH pumped massively on inside knowledge (no other name for this) prior to #3 3) @GDAX abruptly lists Bcash 2 weeks before January 1st Something very wrong just happened!
Users were also displeased, because the addition of BCH to Coinbase was meant to be a withdrawal-only event, so no one expected for order books to be opened so soon, or at all. The opening of trading immediately caused doubts about potential insider information.
There are no known rules on insider information for cryptocurrencies, but the community is buzzing with discontent, especially as crypto coins are becoming mainstream and any blow to their reputation may have widespread repercussions.