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Bitcoin cash deals frozen as Coinbase investigates possible insider trading

22 December 2017

"Given price increase in the hours leading up the announcement, we will be conducting an investigation into this matter".

The allegation from some critics was that Coinbase staffers could have purchased Bitcoin Cash - or BCH - on other exchanges at a lesser value - all the while knowing it was about to open for public trading.

Bitcoin is facing a major threat as a cloned cryptocurrency that shares its name and many of its key features launched on one of the largest cryptocurrency exchanges, sending Bitcoin prices tumbling.

Bitcoin cash traded about 33 percent higher over the last 24 hours at $3,786 as of 6:03 p.m. Wednesday, according to Coinbase. "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", wrote the CEO of Coinbase Brian Armstrong.

Coinbase stated: "Coinbase maintains a strict trading policy and internal guidelines for employees".

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Back in August, bitcoin split into two, creating Bitcoin Cash, in what's called a "hard fork". The second coin has been implemented to better handle some of the shortcomings of Bitcoin such as ever-growing transaction fees and confirmation times.

It means that the 2nd most popular cryptocurrency, Bitcoin Cash, which was first a division of Bitcoin and now an entirely different currency, will be available for buying and selling at Coinbase.

Bitcoin tumbled by 15 per cent on Wednesday after it reached record highs of over $19,850 (£14,811) on Monday.

According to media reports, Coinbase fears its own workers might have exploited the exchange's foray into the cryptocurrency. GDAX said all of its Bitcoin Cash markets would remain offline until noon Wednesday, Eastern Time. Coinbase's Bitcoin Cash announcement on Tuesday seemed to steal the wind behind other cryptocurrencies, as values for Bitcoin, Ethereum, and Litecoin dropped at around the same time.

In a blog post, Coinbase said they considered "developer and community support, security, stability, market price and trading volume" when deciding to fully support the digital currency. Bitcoin Cash is now the third largest cryptocurrency in terms of market capitalization, sitting at more than $29 billion compared to bitcoin's more than $294 billion.

Bitcoin cash deals frozen as Coinbase investigates possible insider trading