The world’s largest cryptocurrency exchange pulled the plug on trading Bitcoin Cash after fears insider traders were manipulating the price.
Bitcoin Cash is a spin-off of virtual currency Bitcoin designed as an upgrade to shorten transaction times.
Developers rewrote some of the blockchain technology underpinning online currencies to allow servers to crunch bigger lumps of data to speed up the process.
Bitcoin Cash has had a rough ride since appearing online in August as critics were concerned how the currency would survive.
Investors swapped Bitcoin for Bitcoin Cash, which has no other way of being created.
Secret trading strategy undermined
Coinbase in San Francisco, reportedly the world’s largest Bitcoin exchange held back from trading the currency because of this issue, but decided to enter the market this week.
CEO Brian Armstrong explained the secret strategy involved telling staff not to let friends, relatives or rivals know of the move.
But trade was suspended within 48 hours when Bitcoin Cash prices started inexplicably rising. Coinbase have also launched an internal inquiry into the matter.
“It appears the price of Bitcoin Cash on other exchanges increased in the hours before our announcement,” said Armstrong.
“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.”
Dark Web Bitcoin worries triggered by research
Bitcoin Cash is trading at a new high of $2,735 – up 24.5% in 24 hours.
Meanwhile, the price of Bitcoin plunged $1,000 in less than an hour as US stock exchange regulator the Securities and Exchange Commission suspended trading in shares of The Crypto Company, partly on concerns of stock manipulation. Bitcoin fell from $17,929 to $16,912.
CME Bitcoin futures expiring in January settled 4.7% lower at $18,200 in their second day of trading. The Cboe Bitcoin futurescontract settled 7.9% lower at $17,555.
Australian researchers have published a study that showed almost half of all transactions in Bitcoin are
“This sort of illegal activity risks stunting the adoption of this technology and limiting the potential benefits to society,” says the team.