Leading cryptocurrency exchange and wallet service Coinbase has today admitted problems with its listing of bitcoin cash were due to a surge in “heavy demand” from buyers.
Addressing the issues which plagued the platform at its introduction of bitcoin cash at the end of 2017, the firm drew focus on significant buy-side pressure from launch as the reason behind technical problems.
Bitcoin cash was introduced to the Coinbase platform for the first time on December 20, only to be withdrawn from the platform a mere matter of hours later.
The technical glitches led to widespread criticism of the platform, including from those who have accused Coinbase or Coinbase employees of engaging in a form of insider trading.
While there is nothing to confirm or deny these allegations, Coinbase representatives have maintained significant buyer demand was responsible for the bugs that impacted on their platform.
Adam White, the general manager of the GDAX exchange which powers Coinbase, said that the decision to stop BCH trading was driven by excessive pressures on the buy side, with as much as 90% of immediate requests from customers looking to buy.
“We paused trading on the BCH-USD book due to significant volatility caused by heavy market buy demand that resulted in insufficient liquidity.”
Limited liquidity in the system resulted in prices spiraling as high as $9,500, far in excess of the price for BCH on other exchanges at the time.
According to White’s statistics, there was over $15 million in transaction volumes within the first 3 minutes of bitcoin cash going on sale.
Ongoing issues with liquidity saw the reinstatement of BCH trading pushed back to after the winter break, to enable the exchange to access the levels of liquidity necessary to support these trading volumes.
White went further, tackling accusations of insider trading and foul play amongst Coinbase staff head-on.
“On November 13th, 2017, employees were notified of the decision to support BCH trading and were explicitly prohibited from buying and selling BCH. All employees were also barred from sharing this information with anyone outside of Coinbase.”