In an article on September 22, the Wall Street Journal revealed that Coinbase had conducted transactions on its own account. Allegations immediately dismissed by the crypto exchange platform in an article on its website. The latter indicated that the famous newspaper was confusing activities on behalf of clients with investment for own account.
The Wall Street Journal publishes a compromising investigation on Coinbase
According to the American newspaper, the crypto exchange has created a trading group that has carried out cryptocurrency exchanges with 100 million dollars raised from its own funds. The media claims in the report that this investment was used to test the effectiveness of proprietary trading and therefore would have made a profit. Also according to the newspaper, a fundraising was carried out with the investment company Invesco Ltd. with a structured note and official sources would have confirmed this agreement.
To build its business group named Coinbase Risk Solutions, Coinbase reportedly recruited experienced traders from Wall Street. In its operations, the group has used funds from the exchange to trade, buy and lock digital currencies. The Wall Street Journal added that sources familiar with the matter confirmed that Coinbase’s trading group was conducting trading on behalf of customers while using company money. To set up this structure, the company’s leaders would have appointed the chief financial officer and the head of institutional sales and trading to find the profiles who would fill the ranks of Coinbase Risk Solutions.
Coinbase responds to Wall Street Journal and denies
We did not wait long for Coinbase to react to these allegations to completely deny what was put forward by the newspaper. In an article published on September 22, Coinbase clearly states that it does not engage in proprietary trading activities and does not act as a market maker.
If risk solutions have been developed, it is only to help institutional investors who would like to invest in crypto. According to Coinbase, a team has indeed been formed but its role is to expand institutional participation in web3 beyond the Hodling.
Recall that Coinbase was before the US Congress last year to unveil its activities. During this passage, the company had refuted the allegations that they were doing transactions on their own account. In its denial, Coinbase claims that:
“Coinbase purchases cryptocurrency as a principal from time to time, including for our corporate treasury and operational purposes*. We do not consider this to be proprietary trading as its purpose is not is not that Coinbase benefits from short-term increases in the value of the cryptocurrency traded.”