Coinbase CEO Brian Armstrong has confirmed the company is investigating claims that insider staff took advantage of insider information about Tuesday’s launch of Bitcoin Cash on the exchange and gained from the development.
Bitcoin Cash price hit a high of $8, 500 on Coinbase and its GDAX service for professional investors after launch. This price was three times higher than a price on other exchanges. There were calls that some inside staff had information of launch prior. And could have bought the coin on other exchanges to trade on Coinbase. This could have triggered trading volume and the higher price as the 10 million. Also, people on Coinbase tried to gain from the action.
In fact, last night the quotes went as far as nearly $9,000 on GDAX.
Armstrong said in a post on Medium that they are investigating the price hikes. The company policy prohibits employees and contractors from trading on “material non-public information” such as when a new asset is added.
He wrote on Medium,
“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”.
He said the company prohibits communication of material non-public information outside the company.
High demand for the coin at Coinbase was following service outages.
The company also announced on Twitter that it has postponed trading of Bitcoin Cash on the GDAX yesterday but later said the service had returned to normal.