Home Business Coinbase Used Company Money To Exchange Crypto Asset Claims Report

Coinbase Used Company Money To Exchange Crypto Asset Claims Report

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Coinbase Used Company Money To Exchange Crypto Asset Claims Report

According to The Wall Street Journal.

Created in July last year with the hiring of at least four Wall Street traders, the original intention of the Risk Solutions unit was to trade cryptocurrencies on behalf of clients. After planning to start trading with company money, the team began creating sophisticated systems to facilitate these transactions, anonymously. sources said.

The group then managed to generate profits by using these funds to trade and stake cryptocurrencies. Considered a test deal for the new effort, the team managed to complete a $100 million deal earlier this year, the sources said.

Coinbase raised the money by guaranteeing a $100 million “structured note” and then sold it to Invesco Ltd. at a fixed rate of 4.01%.

According to the sources, the company used the $100 million to profit from the cryptocurrency markets. Meanwhile, employees hired for the project described the activity as “own account” trading.

For its part, Coinbase said some members of the company had considered pursuing proprietary trading, but ultimately decided against it. Financial companies that invest their own money as well as that of their clients are exposed to the risks of potential conflicts of interest.

Coinbase Rejection

However, five months after the Coinbase Risk Solutions unit was formed, Coinbase CFO Alesia Haas testified before Congress that “we do not engage in proprietary trading on our platform,” which she later reiterated when questioned by Rep. Alexandria Ocasio-Cortez.

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

Later, in a statement to Rep. Maxine Waters, the company admitted that it “purchases, from time to time, cryptocurrency as principal for specific purposes which we do not consider proprietary trading as its purpose is not is not that Coinbase benefits from increases in value of the cryptocurrency being traded”.

Dutch approval

Meanwhile, Coinbase announcement that it had successfully registered with the central bank of the Netherlands, De Nederlandsche Bank (DNB), to operate as a crypto service provider in the region. With the approval, Coinbase became one of the first major exchanges to receive DNB registration.

The crypto exchange is now licensed to offer a wide range of its services, including retail, institutional, and ecosystem products. With the passing of the European Union’s Crypto Asset Markets Bill (MiCA), this would also grant it authorization through the EU.

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