Published: Thu, December 21, 2017
Sci-tech | By Jackie Newman

Coinbase investigates possible insider trading

Coinbase investigates possible insider trading

However, many exchanges, including Coinbase, initially refused to support the innovation, casting doubt on its prospects. Its real gain for the day is more like 64%, around the $3,400 mark, according to data provider Coinmarketcap.

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.

But the trading was short-lived. "Factors we considered include developer and community support, security, stability, market price and trading volume".

At 11 a.m. PST, trading resumed, with those initial buy orders above $4,000 quickly filled. Further, one of the biggest exchanges supporting Bitcoin Cash leads to the assumption that prices of the cryptocurrency would rise in the future. This also had it canceling all resting orders and clearing order books for Bitcoin Cash. "It's to let an order book develop to avoid more insane price gyrations", says Jacob Eliosoff, who runs the New York City-based cryptocurrency fund Trevi Digital Assets Fund. "We will post an update shortly". Two minutes later, "post-only" restrictions were imposed again because of "significant volatility", according to Coinbase. The announcement was made after the prices of Bitcoin cash jumped up some notches. So much for avoiding those insane gyrations.

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The decision came after Coinbase was forced to halt trading of the newly listed Bitcoin Cash-a copycat version of bitcoin created this summer-after its price briefly soared to more than $8,000, a value more than twice what was listed on other exchanges on Tuesday. The policy prohibits employees and contractors from trading on "material non-public information", such as when a new asset will be added to our platform.

The company is investigating the possibility of insider trading by its employees who had prior knowledge of the announcement. Adam White, vice president and general manager of GDAX, said in an interview with Quartz last week that all the company's systems are built in-house. Some believe that high transaction costs and long wait times for transaction confirmation is becoming frustrating for traders.

Coinbase and other exchanges have struggled to keep markets open as new customers pour in.

Total cryptocurrency market capitalisation passes $600 billion.

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