In a new blog post, Coinbase targeted the media, which wrongfully reported that the exchange engaged in proprietary trade. The exchange said that it welcomes the New York Virtual Markets Integrity Report but is uncomfortable with inaccurate media coverage. The post further noted that Coinbase intends to correct the record.
What Went Wrong With the Media Coverage?
According to Coinbase, it acknowledges the New York Virtual Markets Integrity Report, which highlights compliance issues in the activities of digital exchanges. But, as it suggests, its responses to the Virtual Markets Integrity Initiative Questionnaire were inaccurately interpreted by some media reports.
The report stated:
“Coinbase disclosed that almost twenty percent of executed volume on its platform was attributable to its own trading.”
In response to this, the platform 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.”
Coinbase further clarifies that when it executes the trades on the platform, it does so on the consumer’s behalf and not on its behalf.
Self-Trading Reports Are Incorrect
The platform says that the volume figures of the report have been termed “self-trading” by the media, but this isn’t the case. The number only represents the customer-driven volume on Coinbase Consumer. It added:
“Coinbase does not operate a proprietary trading desk, nor does it undertake market making actions.”
What Does the NY Virtual Markets Integrity Report Say?
The New York Virtual Markets Integrity Report included data from nine crypto exchanges that were surveyed, including Coinbase and Gemini. Four other exchanges — Binance, Huobi, Kraken, and Gate.io — were requested to participate in the survey, but the exchanges refused, saying that they do not have trading operations in New York.
In the report, the Attorney General of the state of New York raised several concerns about the ability of the crypto exchanges to provide security to their users and to protect their funds. The regulator also raised issues of market manipulations and stressed the exchanges’ failure to protect their traders from such.
Binance CEO Changpeng Zhao, however, declined to comment on the report during an event in Singapore recently. On the other hand, Coinbase’s response doesn’t answer questions that the Attorney General has raised in the report. For now, all exchanges are buckling up for heightened security and regulations.