CFTC Shakedown of Coinbase
CFTC Orders Coinbase Inc. to Pay $6.5 Million for False, Misleading, or Inaccurate Reporting and Wash Trading
Full Stack
CFTC Orders Coinbase Inc. to Pay $6.5 Million for False, Misleading, or Inaccurate Reporting and Wash Trading
The Commodity Futures Trading Commission (CFTC) settled with popular cryptocurrency exchange Coinbase over claims of “reckless false, misleading, or inaccurate reporting as well as wash trading by a former employee on Coinbase’s GDAX platform.”
GDAX (Global Digital Asset Exchange) began formally in 2015. By 2018, it was rolled into what’s now known as Coinbase Pro, obviously geared toward professional traders, and presumably out of fear/recognition that the CFTC was then sniffing around.
Indeed, according to the CFTC “between January 2015 and September 2018” apparently GDAX “operated two automated trading programs,” generating “orders that at times matched with one another.” While on its face not necessarily a bad thing, the exchange failed to make that fact available to customers who were only knowledgeable of one trading program.
The CFTC concluded the two trading programs “matched orders with one another in certain trading pairs, resulting in trades between accounts owned by Coinbase.” Furthermore, reporting aggregators such as CoinMarketCap received quotes through a more friction-filled process than heavies like the NYSE Bitcoin Index, which appears to have been favored above all -- a substantive advantage.
As for wash trading allegations, the CFTC found the company liable for a now-former employee having placed “buy and sell orders in the Litecoin/Bitcoin trading pair on GDAX that matched each other as wash trades. This created the misleading appearance of liquidity and trading interest in Litecoin.
The shakedown by the CFTC potentially removes the final hurdle for highly anticipated direct public listing of Coinbase.
Quick Bytes
India FM Comes Around to Crypto’s Inevitability
Nirmala Sitharaman, India Finance Minister, recently gave a widely circulated interview. She was asked about cryptocurrency and its legal status in the world’s largest democracy. Sitharaman hinted the government wasn’t as closed off as had been presumed, and in fact insisted they were “not shutting all options off” and seemed to encourage “experimentation.” That’s not to say the government capitulated altogether, but it’s a step in the right direction for the many crypto enthusiasts on the subcontinent. Fingers crossed!
Chelsea Manning Gives NFTs a “Thumbs Down”
Famed whistleblower Chelsea Manning recently weighed-in on the non-fungible token (NFT) phenomenon. It’s not entirely clear what prompted her, beyond the obvious headlines and hype of the moment, but Manning’s take was forceful, referring to them as “a glorified checksum.” Manning insisted they “have no inherent value” and aren’t “even technologically innovative,” requiring a “pre-existing system of violence and control.” Beeple has nearly 70 million arguments to the contrary.
Cash App Makes a Play for Greater Bitcoin Adoption
Square’s Cash App recently announced users “can now instantly send bitcoin to other $cashtags for free, right from your Cash App,” potentially mitigating a sometimes vexing transaction fee issue … a bone of some contention as to the project’s ability to scale. Cash App allows transfers between accounts or even email, enabling withdrawal through its debit Visa connected to a bank account. A $cashtag lets users transfer and request money from different users by entering a username.
We’re Number 3! We’re Number 3! We’re Number 3!
Deutsche Bank Research released its Future of Payments Series: Part III. Bitcoins: Can the Tinkerbell Effect Become a Self-Fulfilling Prophecy? On page 15, research analyst Marion Laboure notes:
“In terms of total currency in circulation, Bitcoin is the third-largest in the world, after the US dollar and the euro. This is mainly due to the vast increase in Bitcoin’s value recently. In early 2019, Bitcoin represented “only” 3% of the US dollars in circulation, but in February 2021 it surged beyond 40% of the US dollars in circulation.”
Absolute Control
Agustín Carstens, General Manager of the Bank for International Settlements (BIS), the reserve bank to central banks, said the quiet part out loud. Carstens admitted the key difference between relatively anonymous free flowing cash in the wild and a central bank digital currency is “huge.” It amounts to banks having “absolute control” of money’s meaning in the modern age, while cash is indistinguishable. Telling.
By C. Edward Kelso, NBTV contributor.
Find more of Kelso’s work here: @coinfugazi / coinfugazi.com