Crypto is a fickle world! The best example is the recent breakout of bitcoin cash (or BCH) on Gdax (an exchange affiliated under Coinbase). Bitcoin cash was recently listed on coinbase and what should have been a good news for coinbase users turned out to be a nightmare, users set sell orders as high as $8000 only to realize that none of the order would ever execute. A lot of people lost their money! There are mixed reactions all across the globe, could this be a case of insider trading or a minor bug from coinbase.
Recently Gdax added support for bitcoin cash and the world went berserk. Some key updates were:
Gdax updated users about the latest listing of BCH-USD and turns out the exchange wasn’t ready for the huge amount of money that would pump in; almost within a few minutes, a ton of institutional money started pouring in from both BTC and the alt coins into Bitcoin Cash. For a few hours, all other coins were bleeding in the coinmarketcap. It happened because Gdax got stuck and continued to show sell orders as high as $8000, it made people feel as if they would miss the boat and started pouring money only to get their orders stuck.
There were so many sell orders that within a few minutes the sell order level went from $3000 to as high as $11000. All of this seemed fishy and fortunately a youtuber caught it all live.
Source: Crypto Investor
In the video, one can clearly see how some people were able to get their sell orders as high as $7000 executed, but it lasted only for 3 minutes before all the orders were freezed and we saw twitter lashing out against Gdax. It means everyone who had the buy orders placed at $5000 got screwed since they could not even cancel their orders. Such was the pandemonium on Gdax that noobs all across the globe almost had a panic attack.
“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.”- Gdax
Earlier, Coinbase had a pop-up for anyone who held bitcoin before August 1, 2017. Users were reminded of bitcoin cash in their accounts. If you had one bitcoin, you were entitled to one bitcoin cash coin worth $3500 but considering the sell orders were as high as $8000, compared to now when the rates are $3500, you lost around $4500 in a matter of just 4 minutes.
There was a lot of activity that happening in a matter of seconds. BTC went down to $16000 from $20,000 within a matter of hours. Even Cointelegraph posted an article stating this
“Interestingly, GDAX, the Coinbase affiliated site for trading, showed a startling price of $9,500 per BCH, though trading on the site was halted.”
What has surprised people is how high the rates started surging. Some people even thought it was a case of insider trading as Coinbase tweeted this a while ago:
“Coinbase maintains a strict trading policy and internal guidelines for employees. Coinbase employees have been prohibited from trading in Bitcoin Cash for several weeks. “
Coinbase is a huge exchange and people look forward to claiming their bitcoin cash and also selling it at a better price but, when you are not allowed to sell at high rates, there is no use of having your coins on coinbase. Twitterati was quick to react and here are a few tweets:
This tweet by my crypto smiley face tweeted the photo of sell order with rates almost 150% high. The picture shows how there are sell orders with no one to buy them. For sure there must be a few noobs who went into FOMO(fear of missing out) and might have fallen prey to the almost unbelievable price of BCC. There was almost no way anyone could predict the sudden meteoric rise of bitcoin cash.
Many are calling for insider trading investigation on #coinbase. Appears the their employees might have sold their stake at $9500 then suddenly no one else could sell #crypto #btc #bitcoin #bitcoincash #insidertrading #wheresmymoney https://t.co/UVtEBO3wj7
— kamranInvestments (@kamranobsidione) December 20, 2019
Another tweet by Kamranivestments, tagging both coinbase and Gdax, suspects insider trading and demands for a probe. He also adds that as part of the insider trading, employees might have sold their stake at $9500 and then all of a sudden there was no buyer left as the FOMO buyers might have got cleared in those stakes. Ouch! He seems to have suffered a loss. It remains to be seen as to how much this is true but this was not well managed by Gdax.
Even Redditors took to the portal and there were tons of comments where people smelled something fishy. This definitely looks shady.
There are numerous threads on Reddit where users are criticizing coinbase for the mismanagement.
Roger Ver, who is a Bitcoin critic often comes to various media channels and praises bitcoin cash. Though it’s still far from getting the top position in the market cap, one cannot simply replace the original bitcoin by merely increasing the block size to 8 MBs. Coinbase and Gdax definitely need to do something about their portal. We have already heard rumors of XMR and Ripple to be added next. If they meet the same fate, people will surely migrate to other exchanges.