Coinbase reportedly used its own funds in its crypto trading activities

According to the newspaper Wall Street, Coinbase Global allegedly used its own cash to trade and bet cryptocurrencies. This is to create new sources of income.

Created last July after recruiting at least four traders from Wall Street, the primary role of the “Risk Solutions” division was to trade cryptocurrencies on behalf of Coinbase clients. However, according to anonymous sources, the department would have started a few months later to develop sophisticated systems to execute transactions on behalf of Coinbase.

The department’s traders then reportedly managed to turn a profit by using the company’s funds to trade and bet cryptocurrencies. According to the sources cited by Wall Streetthe first transaction, which was considered “a demonstration,” would have allowed the team to pocket $100 million.

Coinbase reportedly raised the funds by underwriting a $100 million “structured note” that it sold to Invesco Ltd. with a fixed interest rate of 4.01 per cent.

According to the same sources, the company used the $100 million to invest in the crypto market. The department’s traders, for their part, confirmed that it was a “trading on own account” transaction.

For its part, Coinbase said some of its members initially intended to continue trading activities on their own account before backing out. Note, however, that financial companies that invest their own money and that of their clients are exposed to the risk of conflicts of interest.

Coinbase denies the allegations

But five months after the Coinbase Risk Solutions unit was formed, Coinbase Chief Financial Officer Alesia Haas told Congress that “we do not engage in proprietary trading activities on our platform,” which she later reiterated when asked by U.S. Representative Alexandria Ocasio-Cortez.

“Our statements to Congress accurately reflect our actual business activities,” a Coinbase spokeswoman said. “Coinbase does not and has never had any proprietary trading activity. Any suggestion that we have misled Congress is a deliberate distortion of reality.”

Later, in response to questions from representative Maxine Waters, the company acknowledged that it purchases, “from time to time, cryptocurrency for specific purposes that we do not consider proprietary trading such as these [transactions] does not aim to take advantage of cryptocurrency price increases”.

The stock exchange receives the green light from the Dutch authorities

On the other hand, Coinbase announced that it has registered with the Dutch Central Bank (DNB) to act as a crypto service provider in the region. With this approval, Coinbase became one of the first major exchanges to register with DNB.

The crypto exchange is now licensed to offer a wide range of services and products aimed at both retail and institutional investors. If the MiCA bill were to be adopted by the EU, Coinbase could thus also operate in Europe.


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