Coinbase hit by a $6.5 million fine and reportedly delays its direct listing

Having listed nearly 115 million shares on Nasdaq just a few days ago, Coinbase was all set to make its public debut in next coming weeks.

However, in the wake of a $6.5 million fine issued by the Commodity Futures Trading Commission for earlier misconduct, Bloomberg reported that the company’s direct listing might be pushed back until next month as the plans for a March stock offering has “slipped”. Bloomberg’s information comes from “people familiar with the matter, without providing further details.

Coinbase was fined for reckless false, misleading, or inaccurate reporting concerning transactions in digital assets, including Bitcoin, as well as wash trading by a former employee on Coinbase’s GDAX platform. This took place between January 2015 and September 2018.

According to the CFTC, the company made use of two automated trading programs that matched orders on each other’s order book to show an inflated trading volume. This data was also used for different indices partnered with Coinbase and thereby offering false market information.

In addition, Coinbase was also held liable for the actions of a former Coinbase employee. The employee used a manipulative or deceptive device and was intentionally placing buy and sell orders in the Litecoin/Bitcoin trading pair on GDAX that matched each other as wash trades. Hereby creating the illusion of liquidity and trading interest in Litecoin.

CFTC Acting Director of Enforcement Vincent McGonagle confirmed the penalty and said:

“Reporting false, misleading, or inaccurate transaction information undermines the integrity of digital asset pricing. This enforcement action sends the message that the Commission will act to safeguard the integrity and transparency of such information.”

In an attempt to mitigate reputational damage, Coinbase responded: 

“The settlement order today does not include any finding of harm to any Coinbase customer. While Coinbase neither admits nor denies the CFTC’s findings, we firmly believe that Coinbase has always aimed to create a reliable and secure trading environment for the benefit of our customers.”

No announcements by either party were made on other investigations that are said to be ongoing related to Ethereum and Bitcoin Cash.

Coinbase has not yet commented on the reported delay of their direct listing.

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