Coinbase probes insider trading accusations after Bitcoin Cash spike

bitcoin coinbase
REUTERS/Dado Ruvic/Illustration

(Reuters) – Major cryptocurrency exchange Coinbase said on Wednesday it will investigate accusations of insider trading, following a sharp increase in the price of Bitcoin Cash hours before it announced support for the virtual currency.

Bitcoin Cash, a clone of Bitcoin, jumped to $8,500 on Coinbase’s exchange on Tuesday afternoon, hours before the San Francisco-based exchange launched trading in Bitcoin Cash.

Trading in Bitcoin Cash will be suspended until 1200 ET (1700 GMT) Wednesday, a Coinbase status page showed.

Meanwhile, Bitcoin, the world’s most popular cryptocurrency, fell more than 10% on Wednesday to a one-week low of $15,800. Bitcoin has risen some 1,700% this year and nearly 80% this month alone.

“If we find evidence of any employee or contractor violating our policies  –  directly or indirectly  –  I will not hesitate to terminate the employee immediately,” chief executive Brian Armstrong said in a blog post.

Additionally, employees have been restricted from trading in Bitcoin Cash for several weeks, Coinbase said on Twitter.

Earlier on Tuesday, traders on Twitter alleged that news of Coinbase’s launch of Bitcoin Cash support had been leaked before the official announcement.

Bitcoin Cash was created on Aug. 1 when Hong Kong-based exchange Bitfinex said a minority of Bitcoin miners would create a new version of Bitcoin to make trading faster and easier.

(Reporting by Nikhil Subba and Mekhla Raina in Bengaluru; Editing by Amrutha Gayathri and Sai Sachin Ravikumar)

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