Coinbase to pay $6.5 million fine for falsifying trading-activity data

Coinbase has settled claims brought by the Commodity Futures Trading Commission (CFTC). The largest U.S. cryptocurrency exchange will pay a $6.5 million fine for falsifying data on trading activity, according to the agency’s site.

“From January 2015 through September 2018, Coinbase negligently provided false, misleading and unreliable reports of trades in digital assets, including Bitcoin, on the GDAX electronic-trading platform it operated,” said representatives of the regulator.

Coinbase used Hedger and Replicator programs that generated orders, occasionally matched against one another. This led to inflated trading volumes on certain trading pairs, misleading users.

The regulator also accused Coinbase of wash trading. According to the CFTC, during six weeks—from August to September 2016—a former employee of the exchange systematically placed buy and sell orders in the LTC/BTC pair.

“This created a false impression of liquidity and trading interest in Litecoin,” the regulator stressed.

According to CFTC officials, the employee-generated fake activity accounted for as much as 99% of the LTC/BTC daily volume.

Coinbase will list 114.9 million shares on Nasdaq as part of a direct listing.

Coinbase Order by ForkLog on Scribd

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