- Coinbase paid $6.5 million to settle the claims made by CFTC which gives rise to speculations.
- The well-established cryptocurrency trading platform has been slapped with charges of running “wash trades” which are banned.
- The misconduct called “wash trades” has been allegedly conducted by a former Coinbase employee.
- “Wash trades” are banned because it shows disproportionate trade volume which could represent false figures.
The CFTC (Commodity Futures Trading Commission) declared in a news release on Friday, that cryptocurrency exchange platform Coinbase has shelled out $6.5 million to settle the regulators’ claims. The claim states that Coinbase had misleading transaction data. According to the CFTC, within the period of January 2015 and September 2018, “Coinbase recklessly delivered false, misleading, or inaccurate reports concerning transactions in digital assets.” CFTC alleges that Coinbase operated on two training programs that generated orders where the trade was conducted between the two. This could have misled the traders regarding the trading volume on the exchange which is now known as Coinbase Pro.
The CFTC also slapped Coinbase with fines for misconduct known as “wash trades” in the Litecoin cryptocurrency and Bitcoin. A former Coinbase employee conducting these misconducts, on Coinbase’s GDAX platform. Wash Trades are banned because they represent and generate the appearance of false trading volumes.
The spokesperson of Coinbase said in a statement that it neither admitted nor denied the charges slapped by CFTC. Also, Coinbase “proactively engaged with the CFTC” over the course of the investigation. The statement says that the settlement order “does not include any finding of harm to any Coinbase customer.” The company claims that “it firmly believes that Coinbase has always aimed to create a reliable and secure trading environment for the benefit of our customers.”
Last month, Coinbase filed paperwork publicly to list its stock on the NASDAQ exchange. According to the company’s S-1 prospectus, Coinbase had boasted 43 million verified users at the end of 2020. It also took pride in a total of $90 billion of assets held in trust. In 2012, it started as a platform for the bitcoin trade. Coming to the present scenario, Coinbase takes pride in handling $456 billion of transactions so far. Last year, it generated a revenue of $1.2 billion and made a profit of $322 million.
Coinbase happens to be a digital currency exchange that has headquarters placed in San Francisco, California in the United States. They deal with popularly traded cryptocurrencies like Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, LiteCoin, Tezos, and more. They work with fiat currencies in over 32 different countries and bitcoin transactions and storage in 190 countries all over the world. Brian Armstrong and Fred Ehrsam are the founders of Coinbase and started the company in 2012. The company has been named after coinbase transactions. Coinbase transactions are specific transactions that introduce cryptocurrency into circulation in proof of work cryptocurrencies.