Pasted image into an issue comment does not render

Summary

After pasting an image into the issue comment textarea and submitting the image markdown received, the uploaded image fails to render and only the placeholder {{image.png}} appears.

Steps to reproduce

• Go to an issue on GitLab CE 10.0.1
• Paste an image into a comment
• Submit the comment

Example Project

This issue page for example.

What is the current bug behavior?

Instead of the image, placeholder {{image.png}} appears.

What is the expected correct behavior?

The uploaded image should appear.

Output of checks

This bug also happens on GitLab.com.