Yes, you read it right. Coinbase has been fined $ 6.5 million for fraudulent activity. With Coinbase’s IPO near the corner, this could have a negative impact on the company’s stock market price. From a consumer perspective, it is worrying to see illegal activity taking place at such a reputable company. Note that an employee performed the activities and therefore cannot fully blame Coinbase. However, we expect large exchanges like this to have better management systems.
Why was Coinbase fined?
In order to clarify the allegations that Coinbase was involved in internal trading, the fine was imposed. Although the activities are not new, the decision has been made final. According to a report between 2015 and 2018, the Litecoin exchange was traded internally. A former employee allegedly did it to make Litecoin look more fluid. The report also states that the buying and selling of coins was done through two automatic trading programs.
One of these programs was used to place a sell order on the app’s retail platform. And then the same order was bought by another trading division called Coinbase Pro. A good thing about this was Coinbase’s transparent behavior. The existence of such an investigation was reported long before the IPO. Authorities said Coinbase was ruthless in not dealing with the situation, but it wasn’t all their fault. At the same time, the activity hasn’t harmed any of their customers, which is a huge plus.
The result of it!
It was very clear to the authorities that this was a second liability for Coinbase as the activities were carried out by an employee who had left the company years ago. They also said that Coinbase does not offer derivatives and therefore is not registered with the CFTC. And since no consumers were harmed during that time, the matter was resolved with a simple fine. Coinbase responded to the matter, saying they neither agree nor disagree with the allegations.
At the same time, the company is said to have worked very closely with the CFTC for a proper investigation. They believe in providing a high quality and stable trading platform and they will continue to do so. Still, many users are disappointed with the company. On a forum I read a user who said that he of all people thought Coinbase was playing it fair, but apparently not. This could create a problem for them. But since most of the competitors are bigger scammers (you know what I’m talking about), users likely have nowhere else to go.
What do you think of Coinbase being fined by one of its former employees for illegal activity? Let us know in the comments below. If you found our content informative, like it and share it with your friends.
Also read: Goldman Sachs will offer Bitcoin services to its wealthy clients.
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