The US Commodity Futures Trading Commission and crypto exchange Coinbase have settled for $6.5m after the CFTC pursued charges of “improper reporting of exchange volume” and “self-trading”.
This comes amid the company announcing that it holds an estimated 11% of the crypto market as of Q4 2020.
The case was settled with Coinbase accepting the fine, which will now delay the planned listing of the exchange. The CFTC argued that Coinbase had been misrepresenting Bitcoin trading volume and that a company employee had inflated the demand for Litecoin using inside knowledge.
In his summary of the final ruling, acting director of enforcement Vincent McGonagle argued that “reporting false, misleading, or inaccurate transaction information undermines the integrity of digital asset pricing”.
The CFTC established that between 2015 and 2018 the company used two automated trading programs, Hedger and Replicator, which was hidden from public knowledge, while the company continued to provide data to CoinMarketCap, NYSE Bitcoin Index, CME Bitcoin Real Time Index, and others.
According to the CFTC, this was falsified data that did not correspond to actual trading volumes. According to the watchdog, Coinbase was “vicariously liable” because of these fraudulent trades, including the trades initiated by an employee who placed matching LTC and BTC trades to make it seem like there was liquidity and demand for Litecoin.
While Coinbase has been more or less exonerated from any charges relating to fraudulent activity in the present, the company is still choosing to reassess its position before going for a direct stock listing.
Coinbase remains one of the go-to exchanges. When Coinbase named Satoshi Nakomoto, the anonymous founder of Bitcoin and by extension the cryptocurrency revolution, in a SEC filing, everyone noticed.
Speaking of Bitcoin, the currency continues to be used at the best cryptocurrency casinos out there.