According to the newspaper Wall Street, Coinbase Global reportedly used its own cash to trade and stake cryptocurrencies. This, in order 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” department was to trade cryptocurrencies on behalf of Coinbase clients. But according to anonymous sources, the department would have started a few months later, to develop sophisticated systems to carry out transactions on behalf of Coinbase.
The department’s traders then reportedly managed to generate profits by using the company’s funds to trade and stake 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 dollars.
Coinbase reportedly raised the funds by guaranteeing a $100 million “structured note”, which it sold to Invesco Ltd. with a fixed rate of 4.01%.
According to the same sources, the company used the $100 million to invest in the crypto market. For their part, the traders of the department affirmed that it was about a transaction of “trading for own account”.
For its part, Coinbase said that some of its members initially intended to continue trading activities on their own account, before backtracking. 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
However, 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 which she later reiterated when questioned 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 never has had any proprietary trading activity. Any insinuation 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 which we do not consider proprietary trading as these [transactions] do not aim to take advantage of cryptocurrency price increases”.
The 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 operate as a crypto service provider in the region. With this approval, Coinbase became one of the first major exchanges to register with the DNB.
The crypto exchange is now licensed to offer a wide range of services and products aimed at both retail and institutional investors. Thus, if the MiCA bill were to be adopted by the European Union, Coinbase could also operate in Europe.
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