Coinbase is investigating claims of insider trading from its Bitcoin Cash launch
Coinbase is investigating whether its employees took advantage of inside knowledge to profit on the launch of bitcoin cash (BCH) when it was added the popular crypto exchange.
The company, which recently raised $100 million at a valuation of $1.6 billion, finally added support for BCH — a fork of bitcoin — on Tuesday after much demand from users. But, in true Coinbase fashion, the launch was mired with service outages as the price of the new addition fluctuated wildly.
The price of BCH hit a high of $8,500 on Coinbase and its GDAX service for professional investors, which was almost three times higher than the $3,500 price on all other exchanges. That led to calls of insider trading from Coinbase staff who, in theory, could have profited by buying BCH on other exchanges in the knowledge that it was about to be added to Coinbase, a move that would (and did) trigger increased trading volume and a higher price as the exchange’s 10 million-plus users got a piece of the action.
Now Coinbase CEO Brian Armstrong has confirmed that the company is investigating the events around the price spike.
“Given the price increase in the hours leading up the announcement, we will be conducting an investigation into this matter. 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,” he wrote on Medium.
Armstrong said that Coinbase staff, friends and family have been forbidden from trading BCH for the past month while it formulated plans to list the coin on its exchange. That, he said, is line with policy over ‘inside info,’ including when Coinbase added support for Ether last year and Litecoin this year.
“We’ve had a trading policy in place for some time at Coinbase. The policy prohibits employees and contractors from trading on “material non-public information”, such as when a new asset will be added to our platform. In addition to trading restrictions, it prohibits communication of material non-public information outside the company. This includes to friends and family,” Armstrong explained.
It’s a messy end to what should have been an important moment for Coinbase, which this month hit the top spot in the U.S. App Store thanks to a bitcoin frenzy that has seen the cryptocurrency hit record highs of close to $20,000 in recent weeks. Instead, the BCH has launched has ended in frustration for users who were either unable to get their hands on the coin, or were forced to pay way over the odds for it.
Written by Tech Crunch
Despite Falling Revenue, ICO Fever Remains High
Once celebrities began endorsing ICOs, many were quick to claim that this was the top; the mania had reached its peak and the token bubble was about to pop. And when the SEC filed charges against several dubious projects, forcing others to return funds to investors, this assessment appeared to be accurate. Despite the mid-summer mania having dissipated, however, the number of ICOs in the works is higher than ever.
Reports of the ICO’s Demise Have Been Greatly Exaggerated
In the first nine months of the year, over $3 billion was raised in ICOs, almost $600 million of which came from Tezos, Filecoin, and Bancor. Despite most of the high-profile ICOs occurring in Q1 and Q2, October was actually the most lucrative month to date, pulling in $828 million. November, in comparison, could only muster $682 million.
It feels like 2017 was chockablock with ICOs, but the mania didn’t truly kick in until April. Tokendata reports that just $21 million was raised via ICOs in the first three months of the year before hitting $103 million in April and then almost doubling in May. In the year to date, over $4 billion has been raised, and there is a likelihood that the symbolic $5 billion threshold will be passed by 2018.
The Stats Don’t Lie
The success of each token project has little to do with hitting its hard cap; focusing on the money misses the bigger picture. From an investment perspective, the relative returns of each project, both in dollar and cryptocurrency terms, is naturally of interest though. Some of this year’s biggest ICOs, such as Filecoin, have yet to issue their tokens, while many more are still in the early development stage. As a result, it will be well into 2018 before this year’s reported success stories can be properly assessed.
While the revenue raised from ICOs dropped sharply in November, the number of crowdsales completed actually rose. Be it due to increased competition or weariness for all things “blockchain”, startups are having to settle for a smaller share of the spoils. One report states that in June, only one ICO failed to reach at least 75% of its fundraising target. But over the course of the next three months, 59% of ICOs fell short of that target.
Having delivered an average return of 13.2x this year, ICOs remain attractive to investors and startups alike. ICO Alert lists hundreds of token sales that are imminent or underway, and there is no sign of respite in the first quarter of next year. Analysts seem confident that ICO fever has some way to run yet.
Alexey Scherbin, Global CEO of crowdfunding consultancy ICO Producer, told news.Bitcoin.com:
The number of ICOs is growing faster than investment can flow into crypto assets, making it harder for investors to identify good projects. Due to the sheer number of ICOs, it’s harder for the projects that have real merit to attract investment without spending a lot of money on marketing.
He added: “We expect many of the problems affecting the ICO market to ease in 2018. Regulation in major countries may reduce the overall number of ICOs but will increase their quality, and they will remain an extremely popular way of attracting investment.”
This sentiment was echoed by Overstock CEO Patrick Byrne, who told CNN: “I’m actually quite supportive of the SEC cracking down. The ICO craze this year has led to a lot of people being fleeced. There’s been a lot of people bringing coins public with no business plan.”
Only this week, it emerged that Centra is facing a class action lawsuit, standing accused of violating securities law in its ICO.
Only Bitcoin Can Skewer the ICO Bubble
The greatest threat to ICOs comes not from the SEC or a “decentralized” weary public, arguably, but from within. Evidence suggests that November’s sharp drop-off in crowdsale revenue is due to bitcoin’s breakout. The cryptocurrency has been in bullish form all year, but since November has gone parabolic, leaving altcoins and everything else in its wake.
Having seen funds tied up for months in Tezos’ ongoing legal dispute, investors seem cautious of committing to token sales when there are possibly better returns to be made simply by hodling bitcoin. Once the tearaway cryptocurrency stabilizes, ICO investments are likely to rise.
Despite bitcoin’s astonishing rally in Q4, token sales have still proven lucrative. Hybrid blockchain platform Dragonchain, for example, concluded its ICO in early November, raising $13 million and issuing DRGN tokens at around 6 cents each. The value of those tokens has since increased 25x, dwarfing even bitcoin’s impressive end-of-year run, despite having yet to be listed on a major exchange. With companies as diverse as Overstock, Breadwallet, and Openbazaar all launching their own token sales, it seems there’s plenty of life yet in the ICO.
For entrepreneurs desperate to get on the ICO bandwagon but struggling to come up with that one killer idea, help is now at hand. Yet Another ICO is a website that generates suggestions for decentralized projects. Under the tagline “Let’s make tokens useless again”, it conjures such ideas as the “First distributed influencer marketing platform for virtual reality”. As Poe’s law holds, there’s a fine line between sincerity and parody, and many of its proposals don’t sound so outlandish.
Despite being mocked, memed, and regulated hard, ICO fever remains high. Expect more of the same in 2018.
Written by Bitcoin.com
First Government Blockchain Implementation For Russia
Russia has officially completed its first government-level Blockchain implementation. The state-run bank Sberbank announced today that it is partnering with Russia’s Federal Antimonopoly Service (FAS) to implement document transfer and storage via Blockchain.
According to local sources, the move represents the first case of direct government implementation of Blockchain technology.
On the wider implications of the decision, Andrey Tsarikovskiy, the statе secretary and deputy head of FAS, stated in the Sberbank press release:
“Our country is opening up new possibilities for the economy through the use of advanced knowledge and technology. Making the system launch a reality means we are not only one of the first actual users of Blockchain for government in the world, but also [are pioneering its use] as a practical tool for further growth.”
The Russian government has shown consistent interest in advancing Blockchain technology development in the country for several years. In June of this year, President Vladimir Putin met with Ethereum’s Vitalik Buterin. In August the state-owned bank VEB signed an agreement with the Ethereum Foundation to develop Blockchain education programs in the country.
In contrast, the government’s official position on cryptocurrency use for regular citizens remains relatively strict.
Written by CoinTelegraph
Bitfinex Blocks New Users? Mystery “Invitation Code” Now Required To Register
Cryptocurrency exchange Bitfinex has quietly turned its platform into a private members-only club — new users now require “invitation codes” to open an account. However, in a Kafkian twist, the exchange has not mentioned the change or provided any information about where to obtain a code.
When a new user goes to sign up on the site, they are shown an “Invitation Code” field that, according to the description, was added “due to extraordinary demand.”
– The sign up window on Bitfinex as of December 19, 2017
Since the exchange suddenly started requiring invitation codes without any official announcement, confused users are taking to Reddit in search of information on how to obtain a code.
One enterprising user even created a site that promises to post Bitfinex invitation codes as soon as they appear, meanwhile providing a referral code to an alternative exchange.
So far, there is no public indication that any new user has successfully registered since the exchange started requiring registration codes.
Problems with Bitfinex
Huge price surges in both Bitcoin and altcoin markets have seen a second influx of mainstream consumers into the cryptocurrency space after the phenomenon first occurred earlier this year.
Overwhelmed exchanges appear to be still unable to cope with demand despite reports of infrastructure and human resource improvements. Bitfinex was advertising for staff as of Dec. 15th, calling for help to “create the most innovative & industry-leading cryptocurrency exchange.”
According to their Twitter, Bitfinex is also currently also contending with an extensive DDoS attack on its servers.
Last week, the exchange warned users of a coordinated telephone scam duping consumers into handing over account information.
Written by Cointelegraph