The Commodity Futures Trading Commission (CFTC) said in a news release Friday that cryptocurrency exchange platform Coinbase has paid $6.5 million to settle regulators’ claims that it reported misleading transaction data.
The company’s Coinbase Pro exchange ran two programs that sometimes traded Bitcoin and Litecoin with each other between 2015 and 2018, and included those trades in data it shared with outside services making it look like there was more trading volume than there really was.
Coinbase also didn’t disclose that it had more than one program or was trading through multiple accounts, the CFTC said. The exchange was liable for its actions, the commission added, as a former Coinbase worker abused the programs between August and September 2016 to buy and sell crypto in “wash trades” that artificially inflated activity.
The commission didn’t accuse Coinbase of doing anything wrong, and suggested it was more careless than intentional.
CFTC Commissioner Dawn Stump was worried the decision implied her organization had more power to regulate crypto exchanges than it did, and stressed that Coinbase’s activity was firmly in the past. The activity took place “several years ago,” and the employee in question left years before the fine. Coinbase hadn’t repeated this behavior since, Stump added.
A Coinbase spokesperson said in a statement that it did not admit or deny the CFTC’s charges, and had “proactively engaged with the CFTC” over the course of its investigation. The staement notes that the settlement order “does not include any finding of harm to any Coinbase customer.” The company says it “firmly believe[s] that Coinbase has always aimed to create a reliable and secure trading environment for the benefit of our customers.”
Last month, Coinbase publicly filed paperwork to list its stock on the NASDAQ exchange. According to the company’s S-1 prospectus, Coinbase had 43 million verified users at the end of 2020, with a total of $90 billion of assets held in trust. Since its founding in 2012 as a platform for bitcoin trading, Coinbase has handled some $456 billion of transactions. Last year, it had revenue of $1.2 billion, turning a profit of $322 million.
