Coinbase is one of the largest digital currency exchanges in the world. Satisfying hundreds of thousands of customers each day, the platform recently completed an internal investigation into whether it was responsible for potential insider trading of bitcoin cash (BCH) late last year.
A New Coin Takes Center Stage
Bitcoin cash is a relatively new cryptocurrency. At just under a year old, it came about in late 2017 as the result of a bitcoin fork. Coinbase later offered all account holders bitcoin cash equal to the amounts of bitcoin they were storing on the exchange at that time. The currency was a success and became the answer to many of bitcoin’s problems in enthusiasts’ eyes thanks to its allegedly faster transaction speeds and lower trading fees.
But prior to the coin going live in December 2017, something strange happened. The currency’s price began to skyrocket, and it seemingly never stopped. This didn’t sit well with customers, who accused Coinbase insiders of purchasing heavy volumes of the cryptocurrency in preparation for its relative listing. Coinbase was forced to temporarily close its doors on bitcoin cash trading, and CEO Brian Armstrong promised onlookers that an internal investigation would be launched into the matter.
“All Coinbase employees and contractors were explicitly prohibited from trading bitcoin cash and from disclosing our launch plans over a month ago,” he wrote in a December blog post. “This was communicated multiple times via multiple channels to employees. Given the price increase in the hours leading up to the announcement, we will be investigating 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.”
So… Nothing Happened?
A Coinbase representative now states that the months-long investigation is over; that two national law firms have examined the matter, and that both have concluded that no wrongdoing amongst employees ever took place prior to the currency’s launch.
“We can report that the voluntary, independent internal investigation has been closed, and we have determined to take no disciplinary action,” the representative explains.
While good news, the ordeal is not quite over for Coinbase, as a class action suit against the company is still ongoing. Originally filed in March 2018 by Jeffery Berk on behalf of Coinbase customers, the suit alleges that “Coinbase was negligent, and violated consumer protection laws due to insider trading, resulting in lost customer profits.”
Lynda Grant – the lawyer representing the plaintiff(s) – explains that the case is still in its procedural stages. She also implied that the Commodity Futures Trading Commission (CFTC) might be investigating the bitcoin cash fiasco, though at press time, few details have been released.
The Crypto World Remains Volatile
Like all cryptocurrencies, bitcoin cash has fallen significantly in price and value over the last seven months from about $3,500 to $833 at the time of this writing. Bitcoin evangelist and bitcoin cash creator Roger Ver describes the situation surrounding his design as a “non-crime,” citing that there were virtually no laws in place at the time bitcoin cash came about that said cryptocurrency company employees could not engage in insider trading.
That said, had this behavior occurred in any other industry, the culprit would likely see themselves serving an extended period behind bars.
Founded in June 2012, Coinbase is the largest U.S.-based digital currency exchange. Aside from bitcoin cash, the platform also offers trading opportunities in bitcoin and Ethereum, along with Ethereum Classic, which was added just last month. Recently, the company announced that it was considering adding five new coins to its trading system, which may have potentially contributed to bitcoin’s recent price spike into the $7,000 and $8,000 ranges.
At press time, bitcoin is the only cryptocurrency experiencing a serious bull run. The coin is trading around $8,000 – up over $2,00 from just a few weeks ago.