Digital currency exchange Coinbase Inc. is set to pay a civil monetary penalty of $6.5 million following the Commodity Futures Trading Commissions’ decision to issue an order which settled and filed charges against the company as mentioned above. The order was issued due to official findings of wash trading by a former Coinbase employee, as well as inaccurate or misleading reporting. On top of the $6.5 million fees, Coinbase will be required to cease and desist from all additional breaches of CFTC regulations or the Commodity Exchange Act, as charged.
Coinbase is said to have recklessly provided false, misleading, or inaccurate reports concerning transactions in digital assets between January 2015 and September 2018. These reports were issued on the GDAX electronic trading platform operated by Coinbase and included bitcoin.
Throughout this period, Coinbase operated two automated trading programs: Replicator and Hedger. These programs produced orders which would occasionally match one another, often resulting in trades between accounts owned by Coinbase itself. While GDAX Trading Rules specifically revealed that Coinbase was trading on GDAX, it failed to disclose that it was trading via several different accounts and running more than one trading program.
