Coinbase Trading Desk Plans Raise Market Manipulation Fears


After team members testified to Congress that Coinbase did not utilize its own accounts to trade cryptocurrencies, Coinbase apparently tested the trading arm.

Coinbase tested the introduction of an internal trading department in 2021, according to The Wall Street Journal.

According to a Thursday story citing several persons with knowledge of the situation, the largest cryptocurrency exchange has recruited at least four Wall Street traders to establish a “proprietary” trading desk named Coinbase Risk Solutions. According to insiders, the squad was paid to trade and stake cryptocurrencies for profit.

According to the article, Coinbase Risk Solutions executed an initial $100 million deal earlier this year after obtaining capital via selling a structured note to Invesco. According to reports, Coinbase workers were prohibited from sharing venture-related material or discussing it in internal correspondence.

In 2021, many key Coinbase team members appeared before Congress and said that the company did not utilize its own funds to trade cryptocurrencies. A spokesperson emphasized to The Wall Street Journal that the company had not established a proprietary trading department. They allegedly said, “Any suggestion that we deceived Congress is a deliberate misinterpretation of the truth.”

The spokesman stated, “Coinbase Risk Solutions was created to allow client-driven crypto transactions,” but sources indicated the company was also considering utilizing its own funds for some operations. According to the source, the traders engaged for Coinbase Risk Solutions have already departed the firm.

Despite rising regulatory worries over suspected market manipulation, there are presently no prohibitions preventing cryptocurrency exchanges like Coinbase from opening their own proprietary trading desks in the United States. While none of the main exchanges focuses on trading as a key business activity, several companies have raised controversy in the past as a result of their top executives actively trading on the market.

Also Read: The U.S. Fed is interested in CBDCs, said Jeng at Crypto Council for Innovation

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