Coinbase counters WSJ claim its Risk Solutions group engaged in $100M proprietary trade

In a blog post, Coinbase said the WSJ seemed to confuse the nature of a transaction earlier this year made using money raised through a structured note that was later sold.

The Wall Street Journal and Coinbase are having a difference in definitions. The newspaper published an alleged account of the digital asset exchange’s trading activities earlier this year that it claims amount to proprietary trading. Coinbase responded in a blog post that it had done no such thing.

Relying on information supplied by “people at the company,” the WSJ wrote on Thursday that Coinbase made a $100-million transaction that was viewed inside the company as a test trade by the company’s Risk Solutions group, which had been formed for the purpose of proprietary trading. Proprietary trading is the practice by banks and financial institutions of trading their own money for their own gain, rather than doing so to earn a commission from a client.

It would not have been illegal for Coinbase to engage in proprietary trading, the WSJ noted, but it could still be a matter of concern. An institution could trade against the interests of its clients, for example. Coinbase said in its blog post that “Coinbase does not operate a proprietary trading business or act as a market maker,” although “many of our competitors” do engage in proprietary trading.” The blog post stated:

“The Wall Street Journal published an article highlighting client-driven activities, which they seem to confuse with proprietary trading.”

The source of the controversy is the testimony given by Alesia Hass, CEO of Coinbase’s U.S. subsidiary and chief financial officer of Coinbase Global, before the United States House of Representatives Committee on Financial Services on Dec. 8, 2012, in which she stated, as quoted in the WSJ, “We do not engage in proprietary trading on our platform.”

Related: Institutional staking won’t take off unless asset lock-up solved: Coinbase CFO

Coinbase made the $100-million transaction in question using money raised through a structured note that was sold to Invesco Ltd. at a fixed-rate of 4.01%, the WSJ wrote. Invesco confirmed to the newspaper that the transaction has taken place.

Coinbase said the Risk Solutions group:

“offers solutions to sophisticated institutional investors who seek exposure to the crypto asset class. Some of these investors are still getting familiar with crypto markets and ask for our assistance in managing risks and participating in protocols. […] In doing this, we are following a well trodden path on Wall Street.”

However, the WSJ claimed, “Coinbase used the $100 million to profit in cryptocurrency markets, according to the people” who served as its sources.

Related Posts

European Parliament members vote in favor of crypto and blockchain tax policies

The resolution recommended authorities in the parliament’s 27 member states consider a “simplified tax treatment” for crypto users involved in occasional or small transactions. Members of the…

If Credit Suisse collapses, will it bring more volatility to the crypto market? Watch The Market Report

On this week’s episode of The Market Report, Cointelegraph’s resident experts discuss the Credit Suisse situation and what impact it would have on the cryptocurrency market if…

Mastercard Debuts Blockchain Surveillance Tool for Banks and Crypto-Centric Card Issuers

On Tuesday, the multinational financial services corporation Mastercard revealed that it is launching a new crypto monitoring product called Crypto Secure. The Crypto Secure software aims to…

Crypto Nomads Start to Settle Down as Threat from Pandemic Subsides and Prices Tumble

Some crypto nomads have decided to settle down following the COVID-19 pandemic, despite the decentralized lifestyle being somewhat conducive to the industry. To investigate the recent phenomenon,…

DeSo: The Answer To Elon Musk and Jack Dorsey’s Call for a Decentralized Social Media?

DeSo, a decentralized social blockchain, recently announced the release of its ambitious roadmap to decentralize social media and build the social layer of Web3. The released roadmap…

Shiba Inu (SHIB) Introduces Canyon HUB For SHIB: The Metaverse

The developer team of SHIB: The Metaverse posted more conceptual black & white artwork for the third upcoming HUB in the Web3 series. The Canyon HUB, as…

Generated by Feedzy