Yes, you read it right. Coinbase has been fined $6.5 million for fraudulent activities. With Coinbase’s IPO near the corner, it could have a negative impact on the market price of the company’s share. From the consumers’ perspective, it is disturbing to see that such a reputed company has illegal activities going on inside. Do note that an employee performed the activities and so can not be completely blamed on Coinbase. But we do expect big exchanges like it to have a better management system.
Why was Coinbase fined?
Image Source: Decrypt
In order to settle the allegations that Coinbase participated in internal trading, the fine was imposed. Though the activities are not new, the decision has finally been taken. According to a report between 2015 and 2018, the exchange-traded Litecoin internally. A former employee allegedly did it in order to make Litecoin look more liquid. The report also said that the purchasing and selling of coins were done using two automatic trading programs.
One of these programs used to place a sell order on the retail platform of the app. And then, the same order was purchased by another trading division called Coinbase pro. A good thing about this was Coinbase’s transparent behavior. Well before the IPO, it reported the presence of such an investigation going on. The authorities did say that Coinbase was reckless about not managing the situation, but it was not all their fault. At the same time, the activity didn’t hurt any of their customers, so that is a big plus.
The result of this!
Image Source: Financial Times
The authorities were very clear that this was a second liability for Coinbase, as the activities were performed by an employee who left the company years ago. They also said that Coinbase doesn’t provide any derivative products and so is not registered with the CFTC. And since no consumers were harmed during this time, the matter went away with just a simple fine. Coinbase replying to the matter, said that they neither agree to nor deny the allegations.
At the same time, the company is also said to have worked very closely with the CFTC for a proper investigation. Their belief is to provide a quality and stable trading platform, and they will continue to do that. But still, many users are disappointed with the company. On a forum, I read a user saying that of all companies, he thought that Coinbase was playing it fairly but apparently not. This could lead to being a problem for them. But seeing that most of its competitors are bigger scammers (you know what I am talking about), users probably have nowhere else to go.
What are your thoughts that Coinbase was fined for the illegal activities by one of its former employees? Let us know in the comments below. Also, if you found our content informative, do like it and share it with your friends.
Also, Read: Goldman Sachs will offer Bitcoin services to its wealthy clients.