Coinbase to offer Bitcoin cash, will probe early price move

US cryptocurrency exchange Coinbase will add Bitcoin cash for its users, in a boost to digital wallets of the world's most famous virtual currency.

The San Francisco-based company said it’s investigating a price increase in Bitcoin cash ahead of the announcement. (File Photo)

Coinbase Inc, one of the most popular US cryptocurrency exchanges, is adding the Bitcoin splitoff known as Bitcoin cash to its offerings, giving momentum to a rival of the most traded digital unit. The move didn’t occur without a hitch. The San Francisco-based company said it’s investigating a price increase in Bitcoin cash ahead of the announcement. Bitcoin itself tumbled about 10 percent after the news late Tuesday in the US and registered its biggest one-day drop in about three months. It has since recovered much of the loss.

While Coinbase briefly enabled orders to be posted in US dollars on its platform for more sophisticated traders, it suspended the facility after two minutes due to ‘significant volatility,’ the company said in a blog post. Coinbase plans to reopen the order books December 20 at 9 am Pacific Time.

“We have been monitoring the Bitcoin cash network over the last few months and have decided to enable full support including the ability to buy, sell, send and receive,” Coinbase said in its announcement via a blog post. “Factors we considered include developer and community support, security, stability, market price and trading volume.”

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Bitcoin cash emerged earlier this year amid a split between factions in the cryptocurrency space over proposed software upgrades to the blockchain technology underpinning Bitcoin. Coinbase, which at one point this month was the top free application in Apple Inc’s App Store download ranking, already offered Ethereum and Litecoin in addition to Bitcoin.

“Bitcoin cash is a very legitimate contender,” said Bobby Lee, chief executive officer of BTC China Co. “Bitcoin has faced a lot of scaling issues with the block sizes and so on, so I think Bitcoin cash has solved a lot of these issues.” Bitcoin cash surged on the news, up 41 percent over the past 24 hours, to $3,305.15 as of 10:45 am London time, according to data compiled from coinmarketcap.com.

“It appears the price of Bitcoin cash on other exchanges increased in the hours before our announcement,” Brian Armstrong, chief executive at Coinbase, said in a blog post. While there’s “no indication of any wrongdoing at this time,” he said that “we will be conducting an investigation.”

Armstrong said he “will not hesitate” to fire any employee found to have violated Coinbase policies, which bar them from trading on material non-public information – such as when an asset will be added to the platform. Coinbase said earlier that customers who held a Bitcoin balance at the time of the fork creating Bitcoin cash August 1 will see an equal balance of the rival coin in their account.

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Bitcoin has soared to new highs this month as regulated US derivatives exchanges in Chicago started trading futures in the unit. It was recently at $17,416, about 11 percent off its record high on Monday, but still up about 18-fold this year.

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