Posted on

Has Coinbase Done Enough to Cover The Bitcoin Cash Scandal?

Cryptocurrency Exchanges–On Tuesday, popular U.S. based exchange Coinbase released a statement to Fortune exonerating the company from allegations of insider trading and foul play in relation to last year’s Bitcoin Cash listing.

For those unaware of the story, Coinbase has been embroiled in a multi-lawsuit accusation of insider trading, or foul play instigated by Coinbase employees, in the days leading up to the addition of Bitcoin Cash on the exchange.

That timeline for the controversy surrounding BCH extends back into the Summer of last year. Following a stir over the looming hard fork of Bitcoin (BTC) into the new currency Bitcoin Cash (BCH) that was to take place in August, Coinbase released a statement in July 2017 that the company did not intend to support BCH, which would require investors to redeem their forked coins off the exchange. In August, the company changed its position to a partial support of Bitcoin Cash, thereby allowing users holding their BTC on the exchange during the time of the fork to receive their equivalent Bitcoin Cash. While Coinbase did not set a hard date for when the BCH drop to the exchange would occur, it did say that Bitcoin Cash support would be available before January 1, 2018.

However, on December 20th, weeks before the proposed deadline, the price of BCH pumped to nearly double its initial price, supposedly off of increased demand from South Korean investors. Whether in a bid to catch the rising price for investors or capitalize on the trade fees being missed, Coinbase made the sudden decision to list Bitcoin Cash on GDAX (the company’s trading platform, renamed to Coinbase Pro), without prior acknowledgement. The price of BCH on Coinbase subsequently underwent some of the highest volatility ever experienced in cryptocurrency, pumping to a new all time high before crashing again in a number of hours. Whether from increased customer demand or lack of resources, the price movement temporarily brought a pause to GDAX and Coinbase trading, which took hours to resume.

Immediately following the listing of BCH on Coinbase, in conjunction with the pumping price in the lead up, accusations of insider trading and foul play spread across the investment community, with multiple lawsuits being formed in the weeks after. Coinbase made a prompt response to the allegations, stating that it would conduct a thorough, internal review to investigate the possibility of insider trading.

Just this week, Coinbase released the results of the internal review, telling Fortune that the company had found no evidence of foul play,

“We would not hesitate to terminate an employee or contractor and/or take appropriate legal action if evidence showed our policies were violated. We can report that the voluntary, independent internal investigation has come to a close, and we have determined to take no disciplinary action.”

However, some have been left unsatisfied by Coinbase’s lack of explanation for the sudden price pump in BCH that coincided with the currency being listed on the exchange. Considering the company made a high profile announcement just weeks ago over the possible addition of five new currencies, it’s fair for investors and Coinbase customers to question whether a similar situation will occur.

As opposed to the unannounced, sudden listing of Bitcoin Cash, Coinbase has taken a more proactive approach to the new currencies under exploration. The company made an announcement detailing the coins it is considering for addition, without given explicit details to which currency(ies) will be accepted. Coinbase also reports making the announcement internally at the same time as the official announcement, thereby preventing the possibility of employees to invest ahead of the market reaction. Almost on-cue, Stellar Lumens XLM, the most popular choice for addition to Coinbase, saw its price climb to nearly double in the weeks following the connection to the exchange, with significant price movement accompanying the other four currencies.

While it is admirable that Coinbase has made a new policy of announcing the decision internally in conjunction with the press release, in addition to listing multiple currencies as to avoid a single pump, it still does not give investors assurance that a similar price run will occur ahead of the official coin listing.  Given the inevitability of price pumps associated with currencies going on the exchange, it gives the impression that the market is better served by not attempting to police Coinbase, but simply moving past the importance of exchanges for price growth and adoption. Savvy investors are hoping to turn a profit on the exposure of new coins to new customers, but at some point, exchange-driven growth will reach a point of saturation. As we saw with the price of XRP throughout the first three months of the year, being tied up in a potential exchange listing can have serious inverse effects on a coin’s perceived and market value.


Posted on

U.S. Exchange Coinbase Unprepared for Crypto Boom?

Coinbase–Coinbase, one of the most recognizable and user-friendly cryptocurrency exchanges for Western audiences, has been accused of being under-prepared and overwhelmed by the pace of growth it experienced over the past year. Business Insider has targeted the exchange in a comprehensive review of documents obtained by Mashable, which details, among other things, 134 pages of complaints filed with the SEC. With the company set to go public in the near future, the question looms large: is Coinbase prepared to handle the type of growth cryptocurrency is expected to undergo within the next year?

The leading U.S exchange made national headlines in November 2017, as its 13 million user base grew above that of stock brokerage firm Charles Schwab. However, December brought a wave of negative press for the company, following the debacle of the Bitcoin Cash listing upon the exchange. Not only were investors subjected to a 1300 USD swing in BCH price in the span of minutes, but the exchange was forced to close trading for nearly 24 hours. In addition, the bull run on BCH value in the day leading up to the Coinbase release (which amounted to a near doubling in price), led many to accuse the company’s employees of insider trading. The fallout from the botched listing has led to two class action lawsuits, and a host of user initiated migrations to other exchanges.

On Wednesday, Mashable detailed the findings of a five-month long, Freedom of Information Act investigation, detailing a litany of consumer complaints to the SEC over the poor function of the exchange.

Recurrent among the complaints are users’ reported difficulties in accessing funds, with Mashable providing evidence of widespread frustration at either being locked out of access, seemingly not receiving due funds, or facing difficulties transferring funds between accounts. Cointelegraph

More troubling are direct user statements accusing the company of withholding funds in an effort to boost profit. While the majority of Coinbase’s revenue comes through collecting trading fees and charging for crypto-based withdrawals, the company still has an incentive to keep funds on the exchange, thereby increasing market liquidity and expanding its own assets. It’s unlikely that the company would be employing such a heavy-handed tactic, but the alternative explanation would be negligence and a lack of adequate resources to handle customer demands.

Coinbase has seemingly outpaced its own growth expectations, with the exchange rising from 4.7 million users in 2016, to over 13 million by the end of 2017. Coinbase responded to the allegations of inadequately handling customer funds with a reiteration of their astronomical growth,

…consumer demand for our services increased by 40x [in 2017] and we experienced transaction volumes in November and December of that year that grew by 295 percent.”

Regardless of growth patterns, the exchange is accountable for consumer funds and has a responsibility to maintain a functional service. As Mashable pointed out in its review, Coinbase (and their trading platform GDAX), has experienced a number of outages making it impossible for users to transfer funds or even participate in trades. The frustration over Coinbase’s customer service has led users to conclude that the company is prioritizing growth over functionality, which hurts both the adoption of cryptocurrency and the appeal of investing.

While the exchange has made efforts to increase its workforce and hiring practices, in a bid to meet guidelines as an SEC-regulated broker, the company is still having to contend with the poor feedback it has generated among existing users. As cryptocurrency becomes a greater outlet for investors in the coming year, with 30% of millennials prioritizing cryptocurrency over stocks, the door is open for capable, user-friendly exchanges to compete for Western audiences.


Posted on

Ripple (XRP) Makes Listing On Coinbase A Do Or Die Affair.

Ripple (XRP) Makes Listing On Coinbase A Do Or Die Affair.

Despite all the hype that surrounds Ripple and the fact that it fronts major cross border transactions across the world, the world third largest cryptocurrency still finds a matter as a clog in the wheel of its success.

As much as crypto lovers are yearning and clamoring for the listing of the cryptocurrency which is a guru cross border transactions, their bellow is just a tip of iceberg when compared to the company’s.

Even if not told, it is glaring to the world that if the cryptocurrency is added to the exchange platform, it will surely add feather to the wings and add leaf to the cap of the altcoin. While the demand from users and enthusiast continues to grow, a recent rumor that the altcoin was listed on Coinbase surged its value upward to an unimaginable point amid series of turbulence fisticuffing the crypto industry.

Also, when the exchange platform added Bitcoin Cash, it reflected in the value, soaring it to over 30 percent (from $2,800 to $3,800 per coin.)

Source: Bloomberg

Lastly, the unending tentacles which Ripple which has been able to acquire overtime has only brought it to limelight amid financial institutions and industries, while it is still lagging behind in everyday use as it is yet to be added to major platforms like Coinbase, Gemini among others. Evident of why Litecoin was rated more popular above the altcoin in a recent survey amongst 1000 Americans.

In the latest report released by Bloomberg, the cryptocurrency is not crossing its alms to continue glare the situation without removing the clog.

As two top U.S. cryptocurrency exchanges, Coinbase and Gemini continues to dash the hope of the cryptocurrency and its enthusiast, the San Francisco-based company, according to Bloomberg, has made a step forward by offering the two company dough in exchange for getting listed.

Bloomberg also mentioned that Ripple executive officer enquired if $1 million payment could make Gemini add XRP, while similarly, the cryptocurrency in a previous talks with Coinbase last fall, displayed keenness and wiliness to loan over $100 million worth of XRP to the exchange so that users can trade the asset.

In a move to confirm the information, Bloomberg added that Emmalee Kremer, Ripple’s spokeswoman said some of the info was not right. “Regardless, Ripple has always been transparent about our focus on building and growing a strong XRP ecosystem,” she said.

“We want XRP to be the most liquid digital asset possible to enable faster, cheaper global payments.”