Coinbase disputes idea that it trades crypto for own account

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Coinbase Inc., one of the biggest U.S. cryptocurrency exchange operators, disputed the notion that it engages in proprietary trading after New York’s attorney general said the firm accounted for almost 20 percent of the volume on its own platform.

The company doesn’t trade for its own benefit on a proprietary basis, Mike Lempres, Coinbase’s chief policy officer, wrote in a blog post late Wednesday titled “Correcting the record.” Instead, transactions are executed on behalf of clients who use the firm’s Coinbase Consumer service, Lempres wrote.

“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),” the San Francisco-based firm said. “Coinbase does not operate a proprietary trading desk, nor does it undertake market making actions.”

The attorney general warned Tuesday that many virtual-currency platforms “lack the necessary policies and procedures to ensure the fairness, integrity, and security of their exchanges.” The 20 percent statistic for Coinbase was mentioned in a section of the report that focused on proprietary trading.

“Such high levels of proprietary trading raise serious questions about the risks customers face on those platforms,” the attorney general’s office said. “That certain platforms themselves account for such high levels of activity on their own venues also calls into question whether the natural market for virtual currencies on those platforms is as robust as customers might believe it to be.”

Coinbase welcomes oversight and will keep working with regulators, the firm said in the statement, adding that it voluntarily provided details cited in the attorney general’s report.

“All the information in the report came directly from the platforms, via the questionnaire they filled out,” Amy Spitalnick, a spokeswoman for the office of New York Attorney General Barbara Underwood, wrote in an email Thursday in response to a request for additional comment.

Bloomberg News
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