Coinbase denies proprietary trading allegations
The new attorney general (AG) for the state of New York, Barbara Underwood, recently released a report on the state of cryptocurrency markets. In her report, the"Virtual Markets Integrity Report, Underwood asserted that several exchanges are not playing fairly and specifically accused the Coinbase exchange of conducting "proprietary trading." Coinbase has now responded to the accusation, stating bluntly that the information is inaccurate.
In the report, Underwood states, "almost twenty percent of executed volume" on Coinbase could be attributed to its own trading. She added, "Such high levels of proprietary trading raise serious questions about the risks customers face on those platforms."
Mike Lempres, the exchange's Chief Policy Officer, responded to the assertion, saying that Coinbase "does not engage in proprietary trading." He explained, "Coinbase does not trade for the benefit of the company on a proprietary basis. In order to provide an easy-to-use customer experience, Coinbase Consumer quotes a price and then quickly fills the order from our exchange platform (Coinbase Markets). This takes advantage of the liquidity provided by the entire Coinbase ecosystem."
The NY AG's office has not been a favorite with the crypto community since Eric Schneiderman held the position. Schneiderman, who seemed to be determined to limit the expansion of cryptocurrencies, fell out of grace when it was revealed that might have engaged in some rather questionable sexual activities.
Since Schneiderman's time at the helm, there has been a bitter rivalry between NY and the crypto exchanges. Kraken founder Jesse Powell has referred to the NY environment “abusive” and asserted on Twitter, “NY is that abusive, controlling ex you broke up with 3 years ago but they keep stalking you, throwing shade on your new relationships, unable to accept that you have happily moved on and are better off without them. #getoverit,"
Kraken was mentioned in Underwood's report for allegedly violating state law because it didn’t respond to a “voluntary” questionnaire that it had received from Schneiderman.
Erik Voorhees, founder of ShapeShift, isn't too happy with the state, either. He said in a Twitter post, "...[T]hose kinds of people never seem to realize their behavior is what led to the breakup... NY is going to lose its position at the head of global finance if it doesn't change soon. Keep up the good work."