Coinbase vehemently denies engaging in proprietary trading, although some competitors claim they do.
a wall street journalreport Issued Thursday, Coinbase claims to have hired traders to trade using company funds and wager crypto with the intention of making a profit. According to the report, $100 million in Coinbase funds was used for test transactions, which an anonymous number of his Coinbase employees reportedly called “proprietary.”
In response, Coinbase quickly blogged Position It denied the allegations, claiming the report conflated “client-driven activity” with prop trading.
“Unlike many of its competitors, Coinbase does not operate its own trading business nor act as a market maker,” the company wrote, although which competing exchanges were involved in the practice. He has not made it clear whether he thinks he is.
“In fact, one of our institutional competitive strengths is Prime The platform is our agency-only trading model and we act only on behalf of our clients,” Coinbase added.
self-proclaimed Web3 According to the blog post, the company denies allegations of prop trading, but occasionally buys cryptocurrencies to finance and operate the company.
“We do not consider this to be proprietary trading as the purpose is not for Coinbase to profit from a short-term increase in the value of the cryptocurrency being traded,” Coinbase said. I am writing.
Given concerns about the impact of prop trading on the U.S. economy in the past, it’s no surprise that Coinbase is taking these allegations seriously.
Prop trading is controversial as it is said to have contributed to the 2008 financial crisis.Prop trading as described in WSJMore It may violate the Volcker Rule, a regulation passed in 2010 in response to the financial crisis that prohibits banks from making speculative investments in securities, commodities futures and derivatives.
The Federal Reserve Board passed the Volcker Rule as part of that. The Dodd-Frank Wall Street Reform and Consumer Protection Act is intended to reform the US financial system to prevent future crises.
Some believe that prop trading by financial institutions is risky, while others are skeptical. White House economic adviser Paul Volcker says he believes prop trading “was there but not central” to the 2008 crisis, despite endorsing the rule of the same name. I told you long ago.
However, since Coinbase functions as an exchange for digital currencies, the Volcker Rule may apply.
This is not the first allegation Coinbase and its staff have faced in recent months.Former Coinbase product manager brother last week plead guilty He is charged with conspiracy to commit wire fraud in connection with a cryptocurrency insider trading scheme involving Coinbase’s listing announcement.
And last month, a subcommittee of the U.S. Congress, along with many other cryptocurrency exchanges, called Coinbase a “all documents‘ concerns how each investigates and handles fraud, claiming the exchanges have not taken sufficient steps to prevent illegal activity on their platforms.
Coinbase has not yet responded to a request for comment from. Decryption.
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