Coinbase Investigation Finds There Was No Insider Trading Ahead of Bitcoin Cash Listing

  • An internal investigation found that there was no insider trading ahead of Coinbase's BCH listing.
  • The company still has to deal with a class action lawsuit and a potential CFTC investigation.

An internal investigation conducted by popular San Francisco-based cryptocurrency exchange Coinbase reportedly found that there was no insider trading ahead of its Bitcoin Cash (BCH) listing, despite a suspicious price rise.

According to Fortune, the exchange hired two “well-known” US law firms to conduct a “months-long probe” to find out whether insider trading took place. Last year, Bitcoin Cash’s price surged, shortly before Coinbase publicly announced it was listing the cryptocurrency.

This saw various analysts point to insider trading, as those who knew about the listing were likely stocking up to take advantage of the price rise cryptos listed on the San Francisco-based exchange see.

Addressing Fortune, a Coinbase spokesperson restated that the company would “not hesitate to terminate an employee of contract and/or take appropriate legal action” if evidence pointed toward insider trading – a stance the company’s CEO Brian Armstrong took last year.

The investigation, however, reportedly revealed no insider trading took place. The spokesperson was quoted as saying:

We can report that the voluntary, independent internal investigation has come to a close, and we have determined to take no disciplinary action.

Coinbase spokesperson

An anonymous source close to Coinbase further revealed that a staff lawyer discussed the investigation’s outcome with employees during a meeting last week, presumably meaning the cryptocurrency’s surge prior to the announcement was merely coincidental.

Notably, Coinbase’s initial attitude towards Bitcoin Cash was dismissive, as when the cryptocurrency forked from the Bitcoin blockchain it told users who wanted it to look elsewhere as it wasn’t planning on supporting it.

Later on, it revealed it distributed the “airdropped” BCH to users who held BTC on its platforms at the time of the fork, so they could withdraw their funds and use them elsewhere. In a surprising move, Coinbase then announced it was adding BCH to Coinbase and the Global Digital Asset Exchange (GDAX), which since rebranded to Coinbase Pro.

A flood of trades filled its orderbooks, to the point Coinbase was forced to temporarily halt Bitcoin Cash trading altogether. At the time, Armstrong answered public outcry over insider trading by claiming Coinbase would fire and take legal action against any employee who leaked confidential information.

The investigation doesn’t clear coinbase, however. A class action lawsuit was filed against it last year, by customers accusing the company of negligence and consumer protection law violations. Lynda Grant, a lawyer representing the plaintiffs, added that she believes the US Commodity Futures Trading Commission (CFTC) is investigating the exchange over the BCH incident.

To prevent a similar scenario, Coinbase recently announced it was considering adding five new cryptocurrencies so users are aware: Cardano (ADA), Basic Attention Token (BAT), Stellar Lumens (XLM), Zcash (ZEC), and 0x (ZRX). After being mentioned, all five tokens saw their prices rally in anticipation.

The San Francisco-based exchange recently established a political action committee (PAC), an organization formed to raise funds on behalf of candidates running for public office. Its ads also recently returned to Google and Instagram, in a significant policy reversal.

Hacked Exchange Cryptopia Enables Trading in 40 Different Currency Pairs

New Zealand-based digital asset exchange, Cryptopia has reportedly resumed trading on its exchange as it is now allowing 40 different trading pairs. This, after Cryptopia recently experienced from several different security breaches.

Support For Bitcoin, Litecoin, Dogecoin Pairs Added

Cryptopia’s management announced (via Twitter on March 18th) that it is planning to expand its list of coins which will again be supported on its trading platform. As noted on Cryptopia’s official support website, the exchange has enabled several different trading pairs (as of March 19th, 2019) with major cryptocurrencies. These include bitcoin (BTC), litecoin (LTC), and dogecoin (DOGE).

In response to Cryptopia’s announcement, Twitter user @dgb-chilling, a supporter of DigiByte (DGB), a cryptocurrency that uses five different mining algorithms, said that he had emailed the exchange’s support team to inform them regarding the coin’s latest update (version 6.17.2). He added that “an upgrade was recommended but not mandatory.”

Meanwhile, Chuck Norris (@CryptoTweet6) remarked: 

Now this is good news! Let’s hope the rest of the coins will be released for trading swiftly.

Other users also considered it “good news” that the compromised cryptoasset exchange was gradually resuming its operations. However, one social media user asked when Cryptopia would start enabling deposits while another inquired about why his ARK coins were still not recoverable from the trading platform. He claimed that he had deposited 1,000 ARK, currently valued at around $628, (a popular proof-of-stake based coin) on Cryptopia. The user also complained that his coins were missing “missing because [the exchange] did not update the ARK wallet."

Tens Of Millions Of Dollars Stolen In Hack

On February 27th, 2019, Cryptopia’s management announced that it was “assessing the impact incurred as a result of the hack” which led to the theft of tens of millions of dollars in cryptocurrency. Last month, Cryptopia’s support team had also estimated that the total loss incurred due to the security breaches was of around 10% of its total holdings (in the worst-case scenario).

Notably, the exchange’s official Twitter account had been silent for several weeks (since Feburary 14th). However, it released several announcements, starting in late February, in which it revealed that its staff members were working on securing each customer’s account individually. Cryptopia’s management also noted that it was taking the appropriate measures to ensure that its trading platform is secure when it is officially back online.