
Bitcoin Cash deals frozen as insider trading is probed - warp
http://www.bbc.com/news/technology-42425857
======
blhack
Here's the stickiest thing about this entire thing to me: the name.

Roger Ver (one of the people behind bcash) has said _repeatedly_ that he
believes that his fork deserves the name "Bitcoin" and that it is the "real"
bitcoin. It seems obvious that the _intent_ here is to confuse people.

This, to me, seems like _blatant_ fraud. It is concerning to me that coinbase
would continue to allow this market confusion to build by listing this under
the name "bitcoin cash". Things like this make me long for better regulation
in this space.

Full disclosure: I say this as somebody who holds both bitcoin and bcash in
nearly equal amounts. I mean to say that I don't really have a dog in this
fight.

~~~
Alex3917
Bitcoin Cash is the real Bitcoin. They should just change the forked version
to BCore or BStream, so as not to confuse people.

~~~
tr4cefl0w
I said it before and I’ll say it again, block size increase alone is not
sustainable. The BCash boyz are stubborn and in denial. Might work for now but
in the long term they will need another fork to increase the block size again
and so on. They don’t have a Lightning Network either which is already
available on Bitcoin Testnet and proved to be extremely fast (almost instant)
at very low cost. I hold both but I’m realistic. I only hold BCash because I
know the price is being pumped so I’ll make some money with it.

~~~
blhack
And bcash isn't even living up to its claims right now.

People are trying to move their coins out of storage onto exchanges, and
seeing about an hour before they even get 1 confirmation.

~~~
makomk
It looks like the actual block size limit that most miners are using on
Bitcoin Cash right now is 2MB, which isn't so much of an increase from Bitcoin
at all. (The odd ones out are BTC.com with a 4MB limit and ViaBTC which has
the full 8.) The new Cash difficulty algorithm also has an unfortunate
tendency to oscillate when there's a sudden change in price relative to
Bitcoin's price.

Also, Bitcoin Cash supporters have a habit of... well, frankly, outright lying
sometimes. They were still pushing the idea it was faster than Bitcoin back
when it was running at hours per block most of the time, and the usual
response to people who discovered this was to tell them that the block time
varied and was as low as a minute per block. This was technically true - in
fact, often an equal number of blocks were produced at the minutes per block
and hours per block rate, in alternating 144 block chunks of each. Can you
perhaps see the problem here?

------
thisisit
_When Coinbase launched Bitcoin Cash at 17:20 PST (01:20 BST) it was valued at
about $3,500 (£2,612) per coin.

At the time it suspended it, the company was quoting a price of about $8,500.
_

_Trade of Bitcoin Cash was frozen just four minutes after it began on the firm
's Global Digital Asset Exchange (Gdax) and existing orders were cancelled._

So the prices more than doubled in just 4 minutes. It might not even be a case
of insider trading rather very, very thin order book.

That is why this happened:

[https://status.gdax.com/](https://status.gdax.com/)

> Update - All BCH markets will remain cleared and offline until 9am PST
> 12/20/17\. At that time, _BCH markets will enter post-only mode for a
> minimum of one hour to allow liquidity_ to be established.

That is to say no matching orders allowed of any kind - limit or market which
can suck the liquidity and cause a huge price jump.

One might think that Coinbase/GDAX understand liquidity and market making
after so many years. But no. Makes you wonder what kind of stuff is going on
in other exchanges.

~~~
wjoe
While it's valid to question insider trading in cryprocurrency, I don't think
that's what made the difference here.

Coinbase had said they would add BCH to their exchange before the end of the
year months ago. And people had noted BCH appearing in their API a day or two
ago, and then the trading pages were up for an hour or two before the official
announcement, with some very large orders being placed in advance of trading
going live, with the price already set at $1000 dollars higher than any other
exchange was offering.

Add to this the fact that anyone who held BTC on Coinbase in August receiving
BCH, plenty of people still holding BCH from the last time the price spiked,
and the exceptionally deep pockets of certain people/groups who are supporting
BCH.

You didn't need to be a Coinbase employee to know this was coming, and that it
would, at least short term, have a significant effect on the price. Crypto
traders live on big news and swings like this, and it was inevitable that it
would be a big event.

~~~
avenoir
Bitcoin price started to tank on December 18th @ 00:00 UTC while BCH started
an up-climb at right about the same time. This could be explained by the
anticipation of the announcement from Coinbase. But then shortly after
Coinbase stopped all trades for BCH, I saw this on Twitter [1]. I don't know,
but this last bit is definitely looking very odd.

[1]
[https://twitter.com/whalepool/status/943279673554894848](https://twitter.com/whalepool/status/943279673554894848)

~~~
altocr
I might be an insider but I bought BCH before the pump. The news was
everywhere in the crypto space (telegram, tradingview, twitter) last week.

Ps: I don't trade, I'm a hodleur

~~~
mancerayder
What do you mean, you might be an insider?

------
gizmodo59
Some people do know that its going to be listed.
[https://www.reddit.com/r/CoinBase/comments/7kfbjj/will_coinb...](https://www.reddit.com/r/CoinBase/comments/7kfbjj/will_coinbase_be_getting_xrp_ripple/)

The user mukiwa2 said "Bitcoin Cash coming in the next few days!!" 2 days back
in that thread and he even joked saying he knew an employee in Coinbase.

That response has since been deleted. I was just talking to my friend about
this. Here is the snapshot:
[https://imgur.com/a/cLlp7](https://imgur.com/a/cLlp7)

~~~
shlomok
Whole account was deleted. Archived here:
[https://web.archive.org/web/20171220235902/https://webcache....](https://web.archive.org/web/20171220235902/https://webcache.googleusercontent.com/search?q=cache:oQu2oxqamNMJ:https://www.reddit.com/user/mukiwa2+&cd=1&hl=en&ct=clnk&gl=us)

------
jeffwass
Some questions I'm curious about (including other exchanges besides Coinbase
too).

Do Coinbase employees have to disclose their external crypto-currency trading
accounts (as well as for immediate family members) to the internal compliance
dept?

Is Coinbase employee crypto trading activity subject to pre-approval prior to
trade execution?

What is their policy regarding disclosure of material non-public information
of pending changes/additions to their own exchange?

~~~
jbigelow76
I'm going to guess here that none of what you asked happens and won't until
governments force that sort of oversight (if they even can).

------
avenoir
This is the second event involving BCH which is looking very "artificial" for
the lack of a better word. About a month ago, BCH started an abrupt up-climb
while the prices on BTC started to fall dramatically. BTC recovered soon after
by hitting all-time highs while BCH prices fell pretty hard. Now we get these
talks of insider trading at Coinbase. I don't have much stake in
cryptocurrencies and I actually did not mind the BCH fork, hoping that the 2
cryptos can just co-exist. But from what I'm seeing now this has nothing to do
with advancing Bitcoin and is just a money grab by Roger Ver.

~~~
hackermailman
There's also a good criticism of BCH here:
[https://medium.com/@homakov/weekly-sync-friction-the-most-
im...](https://medium.com/@homakov/weekly-sync-friction-the-most-important-
blockchain-security-metric-1042c0c172b7)

Basically it will be too much bandwidth for most users to bother running their
own core, meaning increased centralization for BCH and easy way to kill it in
the future through some government action or bug.

~~~
namelost
The thesis of the article is that if bandwidth requirements are too high, then
people will stop running full node wallets on their laptops, thus reducing the
number of full nodes in the network.

In reality, you would have to be insane to store bitcoins with a C++ program
permanently connected to and broadcasting your IP address to a p2p network.

Now, it may be that many bitcoin nodes _are_ run by insane people who do
exactly that, but if the foundation of Bitcoin's security is that its users
have no understanding of computer security, then the whole thing is doomed to
failure anyway.

~~~
ric2b
Obviously you don't store coins in a publicly accessible node, I don't know
where you got that idea.

You run the node and connect your light wallet to it, so that you don't need
to trust someone else's node to tell you what is going on. I run mine on an
old netbook.

Some people might store their private keys on the nodes themselves, they
shouldn't.

------
CaptainZapp
"Brian Armstrong responded that he had repeatedly warned his staff not to
disclose its launch plans to family or friends or to trade in the digital
asset themselves."

So the whole staff new about this move, from which it is to be expected to
move the market when published?

Charitably put, that's naive.

~~~
cat199
Companies release products which will change the value of their stocks all the
time.. this is exactly how such events are managed. What else could be done?
lock up employees at work for a week while the market adjusts?

~~~
rokhayakebe
_What else could be done? lock up employees at work for a week while the
market adjusts?_

An email to everyone, a press release, a blog post stating this new feature
will be available to everyone in x days at time T. That would be fair game.

~~~
CaptainZapp
No, it wouldn't. At least then not when that email contains information, which
is market relevant in any form.

It would only then be fair game if that email goes out at the same time as
when the information is publicly available.

I'm not talking about a new iPhone here. But information, which moves the
market. For example: A planned merger to which very few people are really
privy.

------
dustingetz
I watched this happen live. There was a very obvious trading software
malfunction. Here's what I watched happen.

People could place orders before trading started. I was watching BCH/USD and
BCH/BTC which had a fixed price, $3100 USD and 3.00 BTC respectively.

BCH/USD had a huge amount of buy pressure (people buying BCH with cash);
BCH/BTC had a huge amount of sell pressure (people dumping the airdrop).

Only BCH/USD went live; BCH/BTC remained paused. (That was weird, I thought it
looked like a human somewhere hit enter too soon, but apparently it was
intended)

Once trading started (BCH/USD only), people couldn't place new sell orders.
The unlimited buys cleared, including the guy on reddit whose order was "Buy
$100000 USD of BTC at market price", which was filled at 6k and then he was
unable to place a sell at 9k. Apparently placing buys without limits is common
because unlimited buys are filled before limited ones are.

Since you couldn't place a new sell; the price was not bounded; the book
cleared and everything was stuck at 9.5k for a couple minutes. There was a
little bit of trades, not sure if it was only people with existing orders that
were glitched or if maybe some people weren't glitched, maybe all the activity
was orders placed before trading opened.

They realized the issue and paused trading; orders began to accumulate again
roughly around here; here's a screenshot of the orders accumulating
[https://i.imgur.com/0NTyYXx.png](https://i.imgur.com/0NTyYXx.png) There is
incredible sell pressure here, the price was obviously out of whack with
actual supply/demand.

(MY SPECULATION) Since there was never a functioning market I'd expect
Coinbase to rewind all the trades which is what it looks like they are doing.

I might have gotten some of the details wrong, I am just a detached layperson
learning about finance who happened to see this go down.

Sorry reddit, no consipiracy here. But none of those posts in r/bitcoin are
actual humans anyway, it's all fake bots and a couple poor suckers who don't
realize they're arguing with a content farm. Here's some required reading
about the bitcoin information manipulation shitshow.
[https://np.reddit.com/r/BitcoinMarkets/comments/6rxw7k/infor...](https://np.reddit.com/r/BitcoinMarkets/comments/6rxw7k/informative_btc_vs_bch_articles/dl8v4lp/?st=jaotbt8m&sh=222ce783)
TLDR: Nothing is real, everything is fake news, you think it can't possibly be
that bad? it's actually worse than that.

~~~
kooshball
Is there any evidence they're going to rewind or refund the transactions?

~~~
dustingetz
No direct evidence, this is just my speculation maybe i shouldn't have

Indirect evidence is them erasing this blip from their tickers

Obviously also there are some really angry customers who lost large amounts of
cash

------
FLUX-YOU
>"I will not hesitate to terminate the employee immediately and take
appropriate legal action."

What possible legal action can he take? Breach of contract, maybe?

There's no laws regarding cryptocurrency insider trading or manipulation as
far as I know.

~~~
mancerayder
There are laws that impact securities.

And it's not a leap to suggest that these cryptocurrencies are going to be
treated like securities by regulatory bodies. If the SEC argues successfully
(which they seem to be leaning towards) that they're securities, a slew of
regulations will begin to apply.

Simply put, you don't need a law that's SPECIFIC to cryptocurrencies in 2017.

~~~
FLUX-YOU
Coinbase is in the USA, which makes it fall under the SEC, but Gemini (which
all of /r/bitcoin is apparently moving to) isn't -- it's in Canada and the UK.

That's what makes regulating bitcoin hard. It soon becomes a diplomatic
problem.

And there's nothing that these agencies can do to stop the actual wallet-to-
wallet transfer short of nuking all miners or knee-capping and getting your
private key. So even if you were found guilty, you could conceivably flee the
country along with a ton of currency.

Regulation is meaningless without the actual threat of enforcement. It means
all exchanges can pick up and move to more friendly countries.

~~~
proofofanalysis
Gemini Trust Company, LLC is a New York trust company. Gemini is regulated by
the New York State Department of Financial Services (“NYSDFS”).

Source: [https://gemini24.zendesk.com/hc/en-
us/articles/204734485-Is-...](https://gemini24.zendesk.com/hc/en-
us/articles/204734485-Is-Gemini-licensed-and-regulated-)

------
659087
This same pattern seems to repeat immediately preceding any "big announcement"
for pretty much every single coin/token out there. It's obvious that insider
trading is rampant across the entire cryptocurrency market.

I hope Coinbase and their employees' activities are properly investigated at
some point. I think they'll find a lot of "interesting" activity going back
very far, assuming Coinbase hasn't "lost" or modified records to hide those
activities by now.

------
mancerayder
Why is the name Blockstream constantly popping up as a source of blame for
BTC's issues?

That seems to be a theme in the last day or two by the BCH proponents.

~~~
toomim
Here's a historical explanation:

[https://www.reddit.com/r/BitcoinMarkets/comments/6rxw7k/info...](https://www.reddit.com/r/BitcoinMarkets/comments/6rxw7k/informative_btc_vs_bch_articles/dl8v4lp/)

~~~
mancerayder
I spent a bit of time reading this but I have to be honest, it's hard to know
how true the post is, and the nuances are so specific it's not that
interesting to someone not on one of those subreddits or dev team.

What I got out of it: several groups of humans splintered. One side is accused
of trying to sabotage the other. The other side denies it.

I didn't pick up much of BTH's ramifactions from reading that, though. I guess
you posted it to suggest that the increased blocksize isn't in Blockstream's
best interests, and perhaps they played a role in militating against it.

~~~
toomim
Put simply: Bitcoin has split into two camps. Big blockers and small blockers.
Blockstream is a small block company. Bitcoin Cash is a big block technology.

So Bitcoin Cash and Blockstream are politically opposed.

------
JustAnotherPat
Reminds me of when ZRX was added to Poloniex out of the blue. I very much
doubt people with such knowledge wouldn't trade based on it. It's practically
impossible to catch anybody short of getting the SEC involved. It's not like
Coinbase is keeping track of everyone's wallets or has any ability to get info
from other exchanges.

I also think it's funny that people are complaining about this. Isn't this
part of the appeal of crypto trading? That the government doesn't 'level' the
playing field?

------
dahdum
Watching this all go down, I don't see why it would be insider trading. They
opened their retail side (Coinbase) at the same time as their exchange (GDAX)
and gave minutes notice before going live. There was about 0% chance there
would be enough liquidity on the exchange to support a dual launch, so the
price skyrocketed. There wasn't time to deposit enough BCH to give liquidity
either. I don't care about traders making bad moves on GDAX, but to screw
their retail clients so much is not cool.

------
pducks32
Did anyone not expect this? For example, I believe they may add Ripple next so
I have made moves into Ripple knowing the price will spike if they add
support. What's to prevent Coinbase employees to do the same?

~~~
mancerayder
There are specific timing issues, specific spikes. Broad-based knowledge
doesn't cause super spikes of pump (and possibly dump).

------
artursapek
The initial BCH trading on GDAX was pitiful. They shut it down really quickly.

[https://cryptowat.ch/gdax/bchusd/1m](https://cryptowat.ch/gdax/bchusd/1m)

------
sedtrader
Regulations are the next logical step here. My best guess is that the red tape
will at least dampen a lot of the mania around cryptocurricines and bring
people back to reality.

~~~
heurist
I like the volatility :/ I made a couple hundred bucks of lint money yesterday
playing the dip. Paid for my dogs' food for the month and a nice night out
with my wife and her mother. Even though I have some skin in crypto, at this
point I personally don't really care whether it keeps going up or crashes
since I've already made back what I put in. But gaming volatility is a nice
way to pass the evening...

------
0xADADA
It was so apparent if you watched just a few exchanges.

------
rokhayakebe
_I will not hesitate to terminate the employee_

Surely if there is wrongdoing it is not the work of one employee.

------
jerkstate
I don't have a lot of sympathy for anyone who got burned by this. Anyone who
is trading crypto knows that there is a lot of risk. Also, everyone who was
paying attention knew that BCH was coming to Coinbase before the end of the
year, since September. If you're acting like this is a big deal, put your big
boy pants on and/or stop trading crypto.

------
leesalminen
So should I sell the BCH in my wallet right now, before 9AM PST?

~~~
blhack
I think the smartest thing to do is hold it as a hedge against bcash
_actually_ usurping bitcoin as the top currency.

~~~
theprotocol
You're visibly spamming this "bcash" term in every post, which is hurting your
credibility.

------
executive
Is Bitcoin considered a security now?

------
matchcohnn
But but but crytocurrency is so useful right??

1.) It's just like dollar! Shoot, coinbase won't allow me to trade it for 3
months! Every country is banning it? It went up 20% then dropped 50% today?!

2.) It's just like Visa!! Damn it costs me $500 to send $500

3.) It's just like gold! So rare....oh wait, another crytocurrency just came
out with 100M unit of supplies.

4.) It's just like the bank!! Damn another exchange got shut down/frozen. The
insiders made out like bandits

Oh well, who cares. It's for gambling!!!!

~~~
etr-strike
Cryptocurrency is useful. Bitcoin allows me to be my own bank. The rules of
consensus define characteristics of money I believe are important. It allows
me to save my money outside of the global financial system, a system I believe
is corrupt and manipulated. It allows me to program my money, something never
before possible. It allows me to transact freely, with whomever I please.

Money is whatever people believe it to be. You may value the USD, and that's
entirely your right to do so. I choose value Bitcoin. Everyone is free to use
whatever medium of exchange they believe in.

~~~
pmlnr
> Bitcoin allows me to be my own bank.

I too, like to live dangerously. I run a mail server. A web server. Damn, I
was tempted to (partially) host my DNS.

But running my own bank? Hell no. Those who ever had to touch things like PCI
compliance or seem actual money transaction requirements will want to stay
far, far away from being their own bank, so good luck there, you'll need it.

> It allows me to save my money outside of the global financial system

No, at this point in time, it really doesn't. It would, if it was accepted to
be exchanged for things, which is any currency OR asset is, in theory, only
good for. If you can't buy (exchange) food with it, it's worthless.

EDIT: yes, you can, in theory, exchange it to USD and some other real
currencies - with a big 'if' the exchange you want to use has the means to
cover it, you pay taxes on gain, and, if you're really lucky, your bank won't
freeze your account when an unprecedented amount of cash flows in.

> Money is whatever people believe it to be.

Money is whatever people _agree_ on. It's not a belief.

~~~
etr-strike
Sounds like you're intentionally trying to be disagreeable. You don't like the
features Bitcoin provides. That's fine, don't use it. Plenty of other people
do like them. That's what gives Bitcoin its value.

~~~
pmlnr
I started writing a long comment about currencies, assets, rarity, and a few
more things, but I realized it's pointless.

Please get some history books out and read about money. Read about ancient
Rome and what problems rose when mad emperors decided to replace money with
new coins out of the blue. Read about why and how the US dollar is not based
on gold any more. Read about hyperinflation after WWII. Money is regulated to
protect us from ourselves.

Now take a look at the war between BTC and BTH, at how the majority of miners
are not willing to overcome technical issues and work together, the incredibly
waste of energy and hardware, computing the nothing, and tell me: do you
honestly think it's not history, repeating itself, just in another light?

Of course, there are always some who don't care, "get rich or die trying". I'm
not one of these believers.

~~~
down
Your examples comes down to centralized decision & regulation, isn't money
printing also "regulation" that's how they call it, wile bitcoin is the most
decentralized currency, no Emperor can replace it, no changes can be done
without widespread conses.

The incredible energy for digging out gold just to keep it in locked boxes,
same for all precious metals, diamonds.

~~~
pmlnr
Gold has real life use even in electrical circuits, besides being pretty.
Diamond is used in the industry as well, not just engagement rings. They are
also all physical objects.

> no Emperor can replace it, no changes can be done without widespread conses.

When was the last time humans were capable of agreeing and working together
for long term? The blockchain thinks it's got rid of the mad emperor problem,
where in reality the BTC/BTH, ETC/ETH hard forking an existing blockchain is
very similar, and introduced a whole new spectrum of problems humanity tried
for centuries to solve, without success: reaching consensus.

~~~
ColanR
> mad emperor problem

As a tangent, what is that? Didn't find it on google (thought I wanted the
wikipedia on caligula).

~~~
orthecreedence
> Read about ancient Rome and what problems rose when mad emperors decided to
> replace money with new coins out of the blue

I think it was a reference to one of the previous comments in the chain.

