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Bitcoin cash deals frozen as Coinbase investigates possible insider trading

"All Coinbase employees and contractors were explicitly prohibited from trading Bitcoin Cash and from disclosing our launch plans over a month ago".

Bitcoin Cash, a fork of the more popular cryptocurrency that was created in August, is now fully supported on Coinbase's exchange, so you can buy and sell the currency there - just not immediately.

When Bitcoin's blockchain network executed a hard fork this summer, spawning Bitcoin Cash, Coinbase was hesitant to embrace it but ultimately announced it would add support by year's end. Now, an investigation is underway.

Charlie Lee denied any connection, stating he only sold for convenience.

Note the increased volume on December 18, 2017, and the price increase in the BCH/USD trading pair (again, ahead of the Coinbase/GDAX announcement).

Others on Twitter, however, came to Armstrong's defense and said the CEO was clearly not complicit in any insider trading activities. "The problem is that @brian_armstrong made a decision to launch Bitcoin Cash secretly and abruptly giving their employees a huge incentive to do so". "All customers who held a Bitcoin balance on Coinbase at the time of the fork will now see an equal balance of Bitcoin Cash available in their Coinbase account", it wrote in the announcement.

In a post on Medium, he elaborated: "We've had a trading policy in place for some time at Coinbase".

Trading in bitcoin cash will be suspended until 1200 ET on Wednesday, according to Coinbase's status page.

An internal investigation has been launched to look into whether employees have complied with company policies. In addition to trading restrictions, it prohibits communication of material non-public information outside the company.

For now, all eyes are on Bitcoin Cash while other tokens are seeing dives. In the event that insider knowledge was used to obtain a profit, this event could also become a test of whether Bitcoin Cash will be treated the same way as traditional regulated securities. In the 24 hours leading up to that launch, Bitcoin Cash increased from the $1,800 range to more than $2,200. This was communicated multiple times via multiple channels to employees. The fact that the price of the cryptocurrency was rising in the hours before the announcement could be a sign that people were trading based on insider knowledge.

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