The Commodity Futures Trading Commission (CFTC) revealed on Friday that digital asset exchange Coinbase Inc charged $6.5 million to resolve allegations that it registered incorrect transaction details on its professional GDAX website, possibly inflating the apparent trading value.
The firm was also fined for so-called “wash transactions” in Litecoin and bitcoin on GDAX by a disgruntled Coinbase employee, according to a complaint.
The deal falls ahead of the world’s largest cryptocurrency exchange’s expected stock market debut, which is estimated at about $68 billion based on private market transactions, the firm said on Wednesday.
Coinbase’s Big Move
The incredible number illustrates how Coinbase’s perceived value has grown in lockstep with the increase in bitcoin’s price.
Between January 2015 and September 2018, two Coinbase-run trading systems matched orders, culminating in trades between Coinbase-controlled accounts.
According to the CFTC, GDAX revealed that Coinbase was trading on GDAX but refused to report that it was doing so across several trading programs and accounts.
Following that, Coinbase published the details of these transactions on its website and distributed them to monitoring providers and exchanges, either directly or via links to its website.
An excerpt of the statement by the CFTC is as follows:
Washington, D.C. — The Commodity Futures Trading Commission today issued an order filing and settling charges against digital asset exchange operator Coinbase Inc., based in San Francisco, California, for reckless false, misleading, or inaccurate reporting as well as wash trading by a former employee on Coinbase’s GDAX platform.
The order requires Coinbase to pay a civil monetary penalty of $6.5 million and to cease and desist from any further violations of the Commodity Exchange Act or CFTC regulations, as charged.
“Reporting false, misleading, or inaccurate transaction information undermines the integrity of digital asset pricing,” said Acting Director of Enforcement Vincent McGonagle. “This enforcement action sends the message that the Commission will act to safeguard the integrity and transparency of such information.”
Coinbase’s Imminent Direct Listing
The business has invested an approximate $11.4 billion on growth and developed 114.9 million securities for sale in a direct public offering that could value it at more than $100 billion.
In a final update to its S-1 registration document, the firm has stated that it plans to issue between 113.9 million and 114.9 million securities to get on the Nasdaq. Coinbase aims to list on Nasdaq under the ticker symbol “COIN”. It first made a public announcement in December about wanting to list its stock.
In the first quarter, low and large private selling rates for Coinbase’s A and B shares were $200.01 and $375.01, for a volume-weighted average price of $343.58
As a consequence, recent selling rates do not have much significance to the company’s market-opening range. The IPO prospectus made no mention of trade date.
Direct public listings seek to establish a fair playing ground for buyers, encouraging emerging businesses to collect money. At the end of the year, the SEC agreed to authorize floor listings on the New York Stock Exchange.