• Trading volume is said to have been artificially increased
• Coinbase is cooperative
• IPO postponed via direct placement
Multi-million dollar fine for Coinbase
The Coinbase crypto exchange is the largest trading platform for digital currencies in the USA. Trading practices that Coinbase operated between 2015 and 2018 have now cost the company dearly, according to the Wall Street Journal. For example, two programs are said to have been operated on Coinbase Pro, the premium version of the exchange, during this period, which occasionally exchanged Bitcoin and Litecoin with one another. These transactions are said to have flowed into data that Coinbase shared with external services. This gave the impression that the trading volume on the platform was significantly higher than it was actually the case, accused the US authority of the Commodity Futures Trading Commission, which controls the futures and options markets, of the crypto exchange – and condemned the company to a payment of $ 6.5 million.
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No malicious intent can be seen
The misrepresentations came to light because a former employee of the crypto exchange allegedly abused the programs in 2016 by buying and selling crypto currencies. With the so-called “wash trades” he artificially increased trading activity on the platform, according to the authority. The CFTC does not accuse Coinbase of malicious acts, but only of negligence, which led to the former employee being able to exploit the vulnerability. Furthermore, no similar incidents occurred beyond the specified time. Coinbase then stated that no customer had been disadvantaged as a result, but stated that it would accept the fine. “We have been proactive with the CFTC during their investigation and we believe our discussions have been constructive and have contributed to an outcome that is mutually satisfactory,” the company told the Wall Street Journal.
Authority warns of false signals
In contrast to futures and swaps, the authority cannot set regulations for cryptocurrencies, let alone inspect crypto exchanges, but monitor the trading of assets that have been classified as commodities. This also includes Bitcoin and its consorts. According to the newspaper, the Republican CFTC Commissioner Dawn Stump spoke out in favor of the measure against the crypto exchange, but stressed that it did not intend to regulate trading in cryptocurrencies in any way. “I think this case is a bad reflection of the authorities’ priorities,” said Stump. The CFTC can pursue fraud and manipulation of assets such as Bitcoin, but the focus of the authority is on the derivatives markets.
Coinbase IPO apparently postponed to April
Despite the company’s insight, the fine for Coinbase comes at a bad time. The trading provider is currently preparing its billion-dollar IPO, which according to a report by the Bloomberg news agency should originally take place this month. But now the provider was behind schedule and postponed the jump to the stock exchange until April, as the report shows. Trading on the US stock exchange NASDAQ is to take place in the coming month by means of direct placement. At the start of trading, 114.9 million shares should be available. A reason for the delays was not given, and the exchange itself did not comment on the rumors. Spotify, Slack, Asana, Palantir and Roblox had previously chosen the direct placement route, albeit on the New York Stock Exchange. With the Coinbase IPO, it is the first time that a company is listed directly on the NASDAQ technology exchange.
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Millions fines crypto exchange Coinbase IPO plans suffer