Coinbase CEO Promises Investigation Into Insider Trading Allegations - Bitsonline

Coinbase CEO Promises Investigation Into Insider Trading Allegations

Coinbase CEO Brian Armstrong has addressed claims of insider trading at Coinbase, after accusations employees had bought up Bitcoin Cash just before the company announced support and trading on GDAX. The BCH price on other exchanges curiously rose in the hours preceding Coinbase’s “surprise” launch, before surging immediately after.

Also read: Coinbase: We’re Still Working Hard on SegWit Support, Coming ‘In 2018’

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Bitcoin Cash has risen 54 per cent in the past 24 hours, and at press time sits at $3,549.65 USD on CoinMarketCap. There is a marked jump in price from around $1,800 that began on Monday afternoon UTC.

Given the size and timing of the price increase, Coinbase says it is planning to conduct an investigation into what happened. Any employee or contractor found in violation of company policies would be terminated, with the possibility of legal action.

 Coinbase/GDAX Surprise Raises Bitcoin Community’s Ire

There have been rumblings on social media about the events, particularly from sections of the community loyal to Bitcoin and Bitcoin Core’s vision. Some have attacked Coinbase in general for supporting BCH before Bitcoin’s SegWit, while others suggested there was actual wrongdoing:

https://twitter.com/IamNomad/status/943278311509233664

Some have even threatened formal complaints to the U.S. Securities and Exchange Commission (SEC) and even legal action — though at this stage it’s unclear how far such actions would go. Coinbase says it takes regulation very seriously and often suspends accounts if it suspects wrongdoing — but it has also battled the IRS in court over release of users’ personal financial data.

BTC Price Drop and Timing Prompts Even More Anger

Bitcoin price coasterAdding salt was the fact that Bitcoin (BTC) itself dropped from a rally to an all-time-high of over $19,000 USD around the same time, plunging to its current $16,550.

Aside from a few rumors and hints, the only indication Coinbase had given of any support for BCH was a plan to allow customers to withdraw it, if they held BTC at the time of the August 1st 2017 hard fork. There had been little indication Coinbase or its pro trading platform GDAX would allow full trading capability.

There were also complaints about the timing — and the fact trading was allowed to commence almost immediately. The sudden price surge crashed GDAX’s platform within two hours, allowing users to cancel existing BCH buy/sell orders but not create new ones.

Insider Trading Explicitly Prohibited Says Armstrong

Armstrong wrote on the Coinbase blog that, under formal company policy, employees and those close to them would be banned from revealing, or trading on, such information:

We’ve had a trading policy in place for some time at Coinbase. 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. In addition to trading restrictions, it prohibits communication of material non-public information outside the company. This includes to friends and family.

The plans had been revealed to employees and contractors a month ago, with several explicit prohibitions on profiting from or leaking the information, Armstrong continued. Anyone found to have benefited from insider information would face consequences.

What do you think Coinbase’s investigation will reveal? Let’s hear your thoughts in the comments.


Images via Pixabay

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