San Francisco based cryptocurrency exchange giant has cleared its name from any insider trading allegations. Coinbase launched an independent inquiry at the end of last year to refute allegations made against it. They have successfully cleared their name and proven that there was no such activity.
Bitcoin Cash Trading Allegations
There were concerns about the exchange’s employees conducting insider trading through Bitcoin Cash. July 24th saw the cryptocurrency exchange conclude the investigation into this allegation. The investigation showed nothing of the sort.
The December of 2017 saw Coinbase announce that it will list Bitcoin Cash. This was a hardfork from the first cryptocurrency Bitcoin and they added it to their limited portfolio.
Their addition of Bitcoin Cash resulted in a huge market surge. People started buying Bitcoin Cash like there is no tomorrow. The hardforked cryptocurrency saw a 64% rise in a few hours. For a small time, it was even trading at $9,400. This was a result of the announcement of Bitcoin Cash trading on the exchange.
The sudden surge saw them pause all the trading on the platform. This caused the unnatural price increases to correct itself.
Whenever a new cryptocurrency is listed on a major cryptocurrency exchange, the price increased. This is also known as the Coinbase Effect because of their prominence in the cryptoverse.
Surge Before Announcement
Because the price hike came before the announcement industry observers made the allegations. They believed that the employees at Coinbase had insider knowledge of the matter. That is why they purchased the Bitcoin Cash before other investors.
These allegations led to Coinbase starting the 6 month long investigation. They employed services of two well known law firms to do so. The law firms shared their findings with the company over the course of a week of meetings.
A spokesperson from Coinbase said that the company wouldn’t think twice about firing employees if their policies see violation.
They reported that the voluntary investigation has concluded. There needs to be no action taken against any employees.
After the allegations were made, the CEO of the company released the company’s quality control and trading policy. All the employees are under strict regulation. They know they will face dire consequences if they engage in insider trading. The company will not just terminate the contract but pursue further legal action.
The ground reality of the matter is that the company just didn’t handle the announcement of a new listing properly. When the hardfork initially happened, the company said it wouldn’t support the new cryptocurrency. When they launched the BCH on their exchange, it was completely unexpected.
While the internal investigation has cleared the company employees, Coinbase isn’t in the clear yet. disgruntled Coinbase customers have filed a class-action lawsuit against them. They are seeking damages from the company for violating consumer protection laws. There is still a long way to go for the cryptocurrency giant to get out of this situation as the CFTC is reportedly also investigating the cryptocurrency exchange company over the Bitcoin Cash trading allegations.