- CFTC has fined Coinbase over false trading claims.
- Moreover, Coinbase agrees to pay $6.5 million.
- Coinbase faced another investigation on the Ethereum flash crash.
The Commodity Futures Trading Commission (CFTC) has fined Coinbase for false activities related to its in-house trading software.
Added to this, Coinbase managed to close the case without admitting or denying the regulator’s claims.
CFTC Acting Director of Enforcement Vincent McGonagle said,
“This enforcement action sends the message that the Commission will act to safeguard the integrity and transparency of such information.”
CFTC Fines Coinbase to Pay $6.5M
The crypto exchange Coinbase has agreed to pay $6.5 million. However, in order to settle a lot of allegations related to trading records on its GDAX trading platform between 2015 and 2018.
“We proactively engaged with the CFTC throughout their investigation, and we believe that our conversations were constructive and contributed to an outcome that is satisfactory for both parties.”
Even more, the GDAX platform is rebranded as Coinbase Pro. Moreover, the agency mentioned the activity related to two in-house software programs utilized by Coinbase called the Hedger and Replicator.
More so, the CFTC claims that in some cases, those software programs are traded with one another. In turn, this may have helped to artificially inflate price and trading volume on the GDAX platform.
In 2018, Coinbase ceased using the Hedger software at the demand of then-COO Asiff Hirji. More so, Hirji had warned that such in-house proprietary trading firms posed a systemic risk. Under Hirji, the firm switched to an agency trading model where trading happens with an outside third party.
Meanwhile, the CFTC also alleged that one of Coinbase’s former employees had engaged in wash trading. Notably, wash trading is an illegal activity that involves an entity trading with itself. Moreover, in order to convey an artificially high degree of liquidity in a given market.
Furthermore, Coinbase has disclosed in a regulatory filing related to its upcoming plans to go public. In addition, the firm also faced other investigations from the agency related to an Ethereum flash crash. Also, the way in which it listed Bitcoin Cash.
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