The suspicion, as TechCrunchnoted, was that Coinbase employees or others who knew the change was coming could have stocked up on Bitcoin Cash through other exchanges before the company publically announced its addition to the platform. Armstrong wrote, "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".
On Tuesday, Coinbase allowed its users to buy, sell, send and receive Bitcoin Cash but suspended trades following allegations on social media that illegal transactions were being conducted.
And while GDAX appears to be out of the woods (for now) on the bitcoin cash side, a new update to the parent company's status page indicates that customers of the flagship service could experience delays on their bank wires.
Bitcoin Cash first surfaced online back in August when a group of developers "forked" the Bitcoin blockchain. This means that all the retail and professional traders registered on Coinbase can now trade directly in BCH.
Coinbase had initially stated it would not support Bitcoin Cash, however, it reversed this decision within weeks. One, knowing that Coinbase is adding the support for BCH, could have bought BCH in huge quantity on other exchanges.
Coinbase had a policy that prohibited employees and contractors from trading Bitcoin Cash and disclosing launch information before the exchange made things official. Coinbase CEO Brian Armstrong says there's "no indication of any wrongdoing at this time", but the company will be doing a full investigation. Once paused, we cancelled resting orders and cleared all BCH order books.
Within hours, the spin-off cryptocurrency of bitcoin surged to a high of $8,500 on Coinbase's GDAX platform, almost three times higher than the $3,500 price being quoted on other exchanges.
Bitcoin price saw a major correction in a matter of just 24 hours when it dipped from a high of $19,000 to $16,390 - a near 15 per cent decline. 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.