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Coinbase Trading Desk Plans Revive Market Manipulation Concerns

important point

  • Coinbase hired a group of Wall Street traders to test its trading desk last year, The Wall Street Journal reports.
  • Exchange representatives reportedly claimed that the desks were set up for their customers, not for their own trading activities.
  • Other major cryptocurrency exchanges and their senior management have come under fire for past cryptocurrency trading activities.

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Coinbase reportedly tested its trading department after team members testified before Congress that they were not using their own accounts to trade cryptocurrencies.

Coinbase Tests Trading Desk, WSJ Claims

Coinbase has tested the launch of an internal trading desk in 2021. wall street journal Reported.

The cryptocurrency exchange giant hired at least four Wall Street traders to set up a “own” trading desk called Coinbase Risk Solutions, according to a Thursday report citing multiple sources familiar with the matter. It says. According to sources, the group was hired to trade and stake cryptocurrencies to generate profits.

The report further added that Coinbase Risk Solutions completed its first $100 million transaction earlier this year after raising funds through a structured note sold to Invesco. Coinbase employees were reportedly discouraged from sharing information about the venture or discussing it in internal communications.

Several senior Coinbase team members testified before Congress in 2021, claiming: The company did not use its own cash for cryptocurrency transactions. When questioned by The Wall Street Journal, a representative claimed the company had not set up its own trading desk. ‘ they were quoted as saying. “Coinbase Risk Solutions was established to facilitate client-driven cryptocurrency trading,” the representative added, but sources said the company will use its own cash for some of its activities. also claimed to be consideringhired trader Coinbase Risk Solutions has since left the company, the report says.

Exchange boss trading the market

In the United States, despite growing regulatory concerns over possible market manipulation, there is currently no regulation stopping cryptocurrency exchanges like Coinbase from setting up their own trading desks. None of the major exchanges have focused on trading as part of their core business activities, but some companies have caused controversy because they have been actively trading in the market in the past.

Perhaps the best example of suspicious trading activity involving a major cryptocurrency exchange centers around Sam Bankman-Fried, founder and CEO of FTX and co-founder of quantitative trading firm Alameda Research. . Before founding FTX, Bankman-Fried was best known in the cryptocurrency industry for his exceptional trading skills, which helped him achieve billionaire status before he turned 30. FTX does not have its own trading desk, but shares a close relationship. Alameda has continued to question the exchange and its staff’s ethics in trading in the market, even after Bankman-Fried stepped down as CEO in 2021.

Alameda is notorious for trading yield farming crypto tokens and FTX perpetual short commodities, often causing brutal price crashes. Bankman-Fried is also known for ending the so-called “DeFi Summer” period for cryptocurrencies by dumping his farmed Yearn Finance tokens on the market just weeks after saving Sushi from bankruptcy. increase. Bankman-Fried says in 2021 he will be exiting his trading firm since FTX’s boom, but his and his Alameda’s ruthless marketing activities have become something of a joke in the space. It is

Similarly, BitMEX co-founder Arthur Hayes gained notoriety for trading the market during his time as CEO of a derivatives exchange.Ann infamous screenshot It alludes to Hayes’ involvement in market manipulation by ordering his colleagues to “do a stop” on BitMEX clients.[needed] new ferrari. In May, Hayes was sentenced to two years of probation and he was sentenced to six months of house arrest after BitMEX failed to implement adequate anti-money laundering measures. However, he is still an active trader.

Coinbase is not as advanced as FTX or BitMEX and their higher figures, wall street journal If the report is to be believed, the trading desk plans will undoubtedly raise concerns for the exchange’s business operations.

Disclosure: At the time of writing, the author of this work owned SUSHI, ETH, and several other cryptocurrencies.

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