Commodity Futures Trading Commission (CFTC) has imposed a $6.5 million fine on Coinbase, the ongoing prosecution may affect the entire industry

Coinbase will have to pay a $ 6.5 million fine to settle allegations of illegal cryptocurrency trading between 2015 and 2018. How the CFTC fine on Coinbase could affect future crypto company listing?

Coinbase was fined $ 6.5 million by CFTC for past transactions, how will this affect it?

Crypto exchange Coinbase will pay $ 6.5 million in a mediation agreement with the Commodity Futures Trading Commission (CFTC) over the allegations that the exchange-traded itself.

According to an approval order released by the commodity regulator on Friday, Coinbase itself traded small amounts of cryptocurrencies between 2015 and 2018 through two of its automated trading programs. An employee who is currently a former employee of the exchange was also accused of laundering money on some Litecoin during that time period.

One of these programs is designed to predict the amount of any given cryptocurrency Coinbase is expected to sell on its retail brokerage app. The system will then buy the recommended amount of cryptocurrency through its professional trading department (GDAX, now known as Coinbase Pro) and keep it in the exchange’s coffers.

A report by the US Treasury Department and several financial regulators said in 2014. This type of market activity can be seen as wash trading, in which an entity can pump volumes of one type. properties to make it seem more active than it really is.

Importantly, the CFTC does not allege that any Coinbase client has been harmed or that any misconduct has occurred. Rather, they describe the act as reckless but not on purpose. However, the CFTC also states that Coinbase has long discontinued these actions. Coinbase appears to have revealed the existence of this action in Form S-1, which the company filed before publicly listing its shares on the Nasdaq.

The CFTC began investigating transactions made in 2017 by one of the Company’s current employees, following a form S-1. The investigation also includes the design and operation of certain algorithmic functions related to liquidity management on the Company’s platform.

Although the CFTC has conducted other investigations against Coinbase, according to S-1, including the Ethereum market event and the Bitcoin cash listing, this is the only investigation that the exchange predicts will have an impact. have serious adverse effects on current operations.

In a consent statement released to the settlement agreement, CFTC Commissioner Dawn Stump said that while she agrees with the regulator’s findings, she still wants to ensure the public knows that the CFTC is not regulating. spot exchanges.

She stated:

“The fines are primarily based on behavior that has been around for several years, has not been repeated, and in the case of secondary liability, is based on the behavior of an employee who left Coinbase years ago and who has not been forced. sin.”

A Coinbase spokesperson said the company neither admitted nor denied the findings, but said during the process it had not discovered any damage to any Coinbase customers.

How the CFTC fine on Coinbase could affect future crypto company listing?

Acting Director of Enforcement for the CFTC, Vincent McGonagle, stated:

“Reporting false, misleading, or inaccurate transaction information undermines the integrity of digital asset pricing. This enforcement action sends the message that the Commission will act to safeguard the integrity and transparency of such information.”

A separate report by journalist Wu Blockchain states that there are several former Coinbase employees, executives, and other personnel cooperating with the CFTC investigation. Coinbase is in preparation to become a public company.

The ongoing prosecution by the CFTC may affect the entire industry, Wu Blockchain said:

“Coinbase will postpone its listing until April. Earlier, CFTC announced on Friday that it would impose a fine of $6.5 million. It may affect subsequent listings of cryptocurrency companies in the United States and Greater China.”