CFTC Fines Coinbase $6.5M for False Trading Claims

Fines aside, the real damage is happening to consumers who may lose money as a result of supposed manipulation of the Bitcoin price.

The CFTC has found that cryptocurrency exchange Coinbase made false claims about its trading volume and liquidity. The CFTC fined Coinbase $6.5 million for making these claims.

OKCoin, which operates a Bitcoin exchange in China, is the first exchange to receive a fine from the CFTC for false claims in the trading of Bitcoin. In a complaint filed on May 18, the CFTC claims that OKCoin had repeatedly told customers its volume was bigger than it actually was. OKCoin also supposedly issued false volume figures to traders, who were told that they would be able to get up to 100 Bitcoins for each of their orders. OKCoin also allegedly issued “buy” and “sell” orders in both the dollar and bitcoin markets to trick traders into thinking they were dealing with actual trading volume. In its complaint, the CFTC says this behavior earned OKCoin about $6.5 million from about 80. Read more about does coinbase offer derivatives and let us know what you think.

  • Coinbase was fined by the CFTC for making misleading trading statements.
  • In addition, Coinbase has agreed to pay $6.5 million.
  • Following the Ethereum flash collapse, Coinbase was subjected to yet another inquiry.

Coinbase has been penalized by the Commodity Futures Trading Commission (CFTC) for fraudulent actions using its in-house trading software.

Coinbase also closed the matter without confirming or rejecting the regulator’s allegations.

Vincent McGonagle, the CFTC’s Acting Director of Enforcement, said,

“This enforcement action sends a message to the public that the Commission will take steps to protect the integrity and openness of such data.”

Coinbase will have to pay a $6.5 million fine to the CFTC.

Coinbase, a cryptocurrency exchange, has agreed to pay $6.5 million. However, in order to resolve a number of accusations relating to trade data on its GDAX trading platform between 2015 and 2018, the company agreed to pay a settlement. 

According to Coinbase,

“Throughout the CFTC’s inquiry, we proactively engaged with them, and we think that our discussions were productive and led to a satisfying conclusion for all parties.”

Furthermore, the GDAX platform has been renamed Coinbase Pro. The behavior was also linked to two Coinbase in-house software applications named the Hedger and Replicator, according to the agency.

Furthermore, the CFTC alleges that such software packages are sometimes exchanged with one another. As a result, the GDAX platform’s price and trading volume may have been artificially inflated.

At the request of then-COO Asiff Hirji, Coinbase stopped using the Hedger software in 2018. Hirji had specifically cautioned that in-house proprietary trading companies constituted a systemic danger. Under Hirji’s leadership, the company moved to an agency trading model, in which trading is done via a third party.

In the meanwhile, the CFTC claims that one of Coinbase’s former workers was involved in wash trading. Wash trading, for example, is an unlawful practice in which an entity trades with itself. Furthermore, in order to artificially increase the level of liquidity in a particular market. 

Furthermore, Coinbase revealed its future intentions to go public in a regulatory filing. In addition, the company was under investigation by the government in connection with an Ethereum flash crash. Also, the manner in which Bitcoin Cash was listed.

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If you were reading the CFTC fine, you’d think that Coinbase was charged over the fact that its customers “falsely claimed to be trading for their own accounts.” But that’s not the case: the CFTC says Coinbase was fined because it “falsified customer trading information to manipulate Bitcoin prices in several Bitcoin/USD trading pairs.”. Read more about cftc regulations and let us know what you think.

Frequently Asked Questions

Is Coinbase regulated by the CFTC?

Coinbase is a regulated company.

Is Bitcoin regulated by the CFTC?

No, Bitcoin is not regulated by the CFTC.

Will Coinbase go public?

Coinbase has not yet decided whether or not they will go public.

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