Accusations and denials – The rumors travel fast in the cryptosphere, especially when it is the mainstream media that disseminates them. But the boundary between scoop and fake news is often very thin. In the case of the latest claims by the Wall Street Journal (WSJ) against Coinbase, it is still difficult to say which side we are on exactly. Simple FUD or revelation of a scandal potential ?
Brian Armstrong’s company would have used its own funds to trade cryptos?
The various regulators scrutinize very close the group behind the crypto-stock market Coinbase, especially since its IPO (COIN stock). In publication as of September 22, the Wall Street Journal accuses Coinbase Global Inc. of hiring traders. They were loaded to negotiate company funds in the cryptocurrency market.
According to “people close to the case” (anonymoustherefore) having spilled the beans at the WSJ, the team of traders in question would have carried out a $100 million crypto trade at the beginning of this year 2022.
Nothing prohibits formally to the group owning the crypto-exchange to trade cryptocurrencies. However, this may raise concerns – if the WSJ claims are true – that Coinbase could potentially trade against its customers.
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Coinbase counterattacks and sends the Wall Street Journal back to the ropes
The answer Coinbase’s scathing attack on anonymous WSJ informants did not no delay. The same day, on his blogthe crypto exchange held to clarify things.
It wouldn’t be never trading for the company’s own account, but trading activities related to its customers. This customer support would be done via a new small team, created for the occasion, and called Coinbase Risk Solutions (CRS).
Besides that, Coinbase does buy cryptocurrencies on its behalf, but as an investment, for its cash flow in particular. And not for speculative trading, as the Wall Street Journal article implied.
“Unlike many of our competitors, Coinbase does not operate proprietary trading business. (…) In fact, one of the competitive advantages of our Institutional Prime platform is our trading model as an agency, where we act solely on behalf of our clients. Therefore, our motives and those of our customers are aligned by design. (…) Coinbase purchases cryptocurrency from time to time for its own account, including for cash flow and operating purposes. We do not consider this to be proprietary trading, as the objective here is not for Coinbase to benefit from short-term increases in value of the cryptocurrency being traded. »
In summary, “Nothing to report, move on! » according to Coinbase. Was the famous 100 million dollar transaction carried out on behalf of a wealthy institutional client from Coinbase? Maybe, at least if the crypto exchange is to be believed. Coinbase is otherwise in a tricky position with regulators on the issue of staking rewardswhich are also highly sought after by institutional investors.
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