UserAgent: Mozilla/5.0 (Windows NT 6.3; WOW64) AppleWebKit/537.36 (KHTML, like Gecko) Chrome/52.0.2743.116 Safari/537.36

Example URL:
https://jsfiddle.net/wvujbtkt/3/

Steps to reproduce the problem:
1. Go to the min-repro page https://jsfiddle.net/wvujbtkt/3/
2. Begin dragging your finger inside the inner box, and continue until the inner box disappears

Alternate much longer repro (and the reason we care about this bug):
1. Go to https://sway.com/
2. Sign in with any valid Microsoft account
3. Click "create new"
4. Click "heading" in the "cards" menu on the left side
5. Attempt to drag the new heading card by using your finger in the box labeled "background"

What is the expected behavior?
I expect touchmove events to keep firing, like they would if you remove the outer div instead. At the very least, I would expect a touchcancel.

What went wrong?
The browser abruptly stops sending touchmove events to the outer div once the inner div is removed. It doesn't send touchcancel either.

Does it occur on multiple sites: N/A

Is it a problem with a plugin? No 

Did this work before? N/A 

Does this work in other browsers? Yes 

Chrome version: 52.0.2743.116  Channel: stable
OS Version: 6.3
Flash Version: Shockwave Flash 22.0 r0

I tried on the latest and greatest Chromium 55.0.2848.0 and the issue repros there too.