Coinbase pays $6.5 million to settle U.S. false reporting charges
The U.S. Commodity Futures Trading Commission (CFTC) said on Friday digital asset exchange Coinbase Inc paid $6.5 million to settle charges it reported misleading transaction data that potentially inflated the apparent trading volume on its professional GDAX platform.
The regulator also fined the company for so-called “wash trades” in Litecoin and bitcoin by a former Coinbase employee on GDAX, it said in a statement.
The settlement comes ahead of a planned stock market listing for the world’s largest cryptocurrency exchange which is valued at around $68 billion based on private market transactions, the company said on Wednesday.
The eye-popping figure, which implies Coinbase is more valuable than the New York Stock Exchange and Nasdaq, underscores how the perceived value of Coinbase has rallied in lock-step with the surge in the price of bitcoin.
“The settlement order today does not include any finding of harm to any Coinbase customer,” a Coinbase spokesman said. “While Coinbase neither admits nor denies the CFTC’s findings, we firmly believe that Coinbase has always aimed to create a reliable and secure trading environment for the benefit of our customers.”
Between January 2015 and September 2018, two Coinbase-operated trading programs matched orders with one another, resulting in transactions between accounts owned by Coinbase.
GDAX disclosed that Coinbase was trading on GDAX but failed to disclose it was operating more than one trading program and through multiple accounts, the CFTC said.
Coinbase subsequently included the information for these transactions on its website and provided that information to reporting services and exchanges, either directly or through access to its website.
“Transactional information of this type is used by market participants for price discovery ... and potentially resulted in a perceived volume and level of liquidity of digital assets, including bitcoin, that was false, misleading, or inaccurate,” the CFTC said.
The settlement comes ahead of a planned stock market listing for the world’s largest cryptocurrency exchange which is valued at around $68 billion based on private market transactions, the company said on Wednesday.
The eye-popping figure, which implies Coinbase is more valuable than the New York Stock Exchange and Nasdaq, underscores how the perceived value of Coinbase has rallied in lock-step with the surge in the price of bitcoin.
“The settlement order today does not include any finding of harm to any Coinbase customer,” a Coinbase spokesman said. “While Coinbase neither admits nor denies the CFTC’s findings, we firmly believe that Coinbase has always aimed to create a reliable and secure trading environment for the benefit of our customers.”
Between January 2015 and September 2018, two Coinbase-operated trading programs matched orders with one another, resulting in transactions between accounts owned by Coinbase.
GDAX disclosed that Coinbase was trading on GDAX but failed to disclose it was operating more than one trading program and through multiple accounts, the CFTC said.
Coinbase subsequently included the information for these transactions on its website and provided that information to reporting services and exchanges, either directly or through access to its website.
“Transactional information of this type is used by market participants for price discovery ... and potentially resulted in a perceived volume and level of liquidity of digital assets, including bitcoin, that was false, misleading, or inaccurate,” the CFTC said.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.