A major bitcoin exchange is investigating potential insider trading

A major bitcoin exchange is investigating a potential case of insider trading after the price of bitcoin cash rocketed.

Coinbase announced its support for the bitcoin offshoot late on Tuesday, but the price of the cryptocurrency rocketed before the news was made public.

Read more: Bitcoin plunges below $16,000

"Given the price increase in the hours leading up the announcement, we will be conducting an investigation into this matter," said Coinbase founder Brian Armstrong in a blog post.

"If we find evidence of any employee or contractor violating our policies — directly or indirectly — I will not hesitate to terminate the employee immediately and take appropriate legal action."

Employees of the firm, which is backed by top Silicon Valley venture capitalists, had been banned from trading the cryptocurrency for more than a month and are contracted not to share information such as support for a new currency with the public.

Read more: Bitcoin not a threat to financial stability say economists

Bitcoin cash rocketed to a new record high of $3,000 after the announcement but made gains prior to the news.

Meanwhile, Coinbase halted trading of bitcoin cash. It's expected to resume later today.

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