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Coinbase pays $6.5 million fine to CFTC for self-trading between 2015 and 2018; delays IPO listing to April

Coinbase seems to be in the news almost every other day, whether it’s for good or bad reasons. After its recent news of direct listing for its public debut, the exchange is in news again about being fined by CFTC. Commodity Futures Trading Commission has reported that Coinbase was involved in the self-trading of digital assets in the past. Hence, the exchange has been penalized to pay a $6.5 million fine.

As per an order by the regulatory body, published on Friday and reported by The Wall Street Journal, Coinbase self-traded cryptocurrency as part of two of its trading programs. This was done between 2015 and 2018, and the regulator mentions that Coinbase considered that trading as part of its trading volumes to show other clients how much it’s being used. The trading was done as part of GDAX (now called Coinbase Pro). That wasn’t all, an employee – who’s now left – was also involved in wash trading Litecoin during the period. Wash trading refers to the fact that the buyer and seller collude to make the trade which gives a false indication that the market has more liquidity.

Worth noting that the regulator is stating that these practices haven’t caused any harm to the consumers. CFTC also highlights the fact that this was done in the past, and perhaps not deliberately, and hasn’t been repeated since. The regulatory body’s commissioner Dawn Stump mentions that CFTC doesn’t monitor cryptocurrency exchanges, however, it can check fraud and manipulation.

While this might be unrelated news, though the timing causes suspicion, Coinbase has delayed its planned IPO from March to April. The company will do a direct listing of its Class A common shares next month. Even before public trading, the private trading of these shares pegs the price between $200 and $375. This values the company at up to $100 billion, showing a lot of interest around the planned listing.

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