CFTC is slamming GDAX with $6.5 Million Fine

GDAX, better known as Coinbase Pro, is the prime location for crypto asset trading. The platform is reportedly facilitating many major crypto wallets and investors globally. However, recently, the platform came under fire of the Commodity Futures Trading Commission (CFTC) for market manipulation and wash trading allegations. The exchange giant has already been charged with a $6.5 million dollar fine by the consent order issued by CFTC on March 19, 2021.

The timing of this regulation is untimely for Coinbase as the company is in the process of filing for a public listing. Major players like BTC, ETH, and ADA have helped to maintain the highest liquidity levels on the platform. Currently, the crypto exchange platform is valued at roughly around $67.6 billion. There are about 43 million active retail users, and nearly 7000 institutional crypto traders are using the platform. 

CFTC Raise Serious Allegations against Coinbase GDAX

According to the contents of the CFTC consent order, Coinbase allegedly issues false information about different cryptocurrencies, including Bitcoin, to generate misleading reports. Between the duration of January 2015 and September 2018, Coinbase hosted two automated trading programs Hedger and Replicator, to generate matching orders. The GDAX informs its users that Coinbase operates on its platform. However, the information about Coinbase using multiple accounts on GDAX was kept confidential. 

The order finds out that between Hedger and Replicator, Coinbase accounts registered on both sides performed inter-trading. The orders suggest that this anonymous trading by Coinbase made a wrong impression on the prospect traders in terms of price discovery, perceived volume, and asset liquidity. The order also paid attention to the issue about a former Coinbase employee using a deceptive device to place duplicate buy and sell orders in Litecoin/Bitcoin trading pair. These practices by Coinbase operators were listed as manipulative and misleading by the CFTC that qualifies Coinbase for wash trading offenses.

Is Coinbase Working Alongside CFTC?

Coinbase Inc. is required to pay $6.5 million in the amount of civil monetary penalty by the decree of CFTC consent order. Vincent McGonagle, acting director of CFTC, is of the view that this order was necessary to set an example for the perseverance of digital asset pricing integrity. He believes that this fine is a warning to the cryptocurrency industry to refrain from engaging in illicit trade practices. 

Coinbase has responded to these allegations with a firm conviction that the platform has never harmed its traders’ interests. In the response briefing about the CFTC case, Coinbase execs showed a willingness to cooperate with the CFTC investigation. The platform maintains that all their interaction with CFTC has been constructive and satisfactory for both parties. However, Coinbase has refrained from admitting or denying any allegations altogether. 

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