Coinbase has agreed to cough up $6.5 million after regulators said it “undermined the integrity of digital asset pricing” by artificially boosting trading volumes.
The Commodity Futures Trading Commission (CFTC) found that between January 2015 and September 2018, Coinbase inaccurately reported transactions on its GDAX platform (now known as Coinbase Pro).
Specifically, CFTC claimed the crypto exchange operated two automated trading programs that would match orders, resulting in effectively fake trades between official Coinbase accounts.
Coinbase neither admitted or denied the charges as part of the settlement. However, both the exchange and the CFTC agreed the actions were “reckless but not intentional”.
In a statement to The Verge, Coinbase stressed that the CFTC’s statement doesn’t claim any of the company’s 43 million registered users were directly harmed by the bots.
Coinbase employee faked Bitcoin/Litecoin trades
While Coinbase was quick to highlight findings absolved it of any wrongdoing, part of the CFTC’s case indeed concerned wash trading by a former employee.
CFTC regulators accused the ex-staff member, “Employee A,” of creating false liquidity and trading interest in GDAX’s trading pair between Bitcoin and Litecoin.
Though “Employee A” will not be charged, the CFTC deemed Coinbase vicariously responsible for their actions.
In any case, the settlement is unlikely to put a dent in Coinbase’s coffers.
In fact, $6.5 million is less than 0.2% of what chief exec Brian Armstrong stands to earn as a result his epic compensation package awarded last August.