Coinbase fined $6.5Mn to settle govt. investigation for fake reporting

Coinbase fined $6.5Mn to settle govt. investigation for fake reporting

California-based cryptocurrency exchange firm, Coinbase Global Inc. has been fined USD 6.5 million by the U.S Commodity Future Trading Commission to settle claims raised due to false or misleading reporting as well as so-called wash trading during 2015 to 2018. Alongside the fine, Coinbase is also subject to stop any further violations of the CFTC regulations.

Reports have it that during the span of January 2015 to September 2018, Coinbase operated two automated trading programs, Replicator and Hedger, that produced orders that at times matched one another on the GDAX electronic trading platform brought into function by the firm.

Although the GDAX regulations did disclose that Coinbase was trading on the GDAX platform, it failed to reveal that the company was operating more than one trading programs and trading via multiple accounts.

On top of that, the improved trading information from the company was also fed to third-party services like CoinMarketCap, NYSE Bitcoin Index, and CME Bitcoin Real Time Index.

According to the order, ‘transactional information of any type is used by market participants for price discovery related to trading and exchange or owing digital assets. These potentially resulted in perceived volume and level of liquidity of digital assets that were misleading, inaccurate, or false.

The fine from CTFC comes way before Coinbase’s plans of emerging as a public entity. Post the announcement of its filing of a draft registration for an initial public offer in December last year, the firm said it has decided to go public through a direct listing on January 28th this year. Moreover, as a part of the order, Coinbase has neither admitted nor denied the charges put forth by CFTC.

An official source close to the company mentioned that the settlement order does not include any finding of harm or misconduct to any Coinbase customer.

Source Credit: https://siliconangle.com/2021/03/21/coinbase-pays-6-5m-settle-government-investigation-false-reporting/