Coinbase is paying the price for its earlier cryptocurrency trading practices. Coindesk and the Wall Street Journal says the Commodity Futures Trading Commission has fined Coinbase $ 6.5 million for allegedly providing misleading information about its trading volumes. The company’s Coinbase Pro exchange operated two programs that Bitcoin and Litecoin sometimes traded with each other between 2015 and 2018, and included the transactions in data it shared with outside services, making it appear as if there was more trading volume than there was really was.
Coinbase also did not disclose that it had more than one program or traded through multiple accounts, the CFTC said. The exchange was held accountable for its actions, the commission added, as a former Coinbase worker abused the programs between August and September 2016 to buy and sell cryptocurrencies in ‘laundries’ that artificially inflated activity.
The commission did not accuse Coinbase of doing anything wrong, and suggested it was more careless than intentional.
CFO Commissioner Dawn Stump was concerned that the decision implied that her organization had more power to regulate crypto exchanges than it did, and stressed that Coinbase’s activity had been strong in the past. The activity took place ‘several years ago’ and the employee in question left years before the fine. Coinbase has not repeated this behavior since, Stump added.
The decision comes at an important moment for Coinbase and the industry as a whole. Interest in cryptocurrency has risen over the past few months, and Coinbase could play a crucial role in the rise as one of the best-known exchanges. The fine could eliminate some uncertainty and help Coinbase focus on its future, even if the move also highlights uncertainty about regulations.