A very good guess either that or front running. This is what market makers used to do back in the day, aka "front running". Its banned in the financial markets because there is regulation and thus illegal. Either that or like you say they took a massive hit and basically held a ton of orders to mitigate the damage.

And if Coinbase doesn't fall under those financial regulations, that is fraud.

Considering the loss of position over the last week, it's certainly feasible.