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The statement sounds as though the employee was deliberately generating the appearance of liquidity and demand by placing wash trades. It's mind boggling that t

The statement sounds as though the employee was deliberately generating the appearance of liquidity and demand by placing wash trades. It's mind boggling that this would happen at one of the most regulated exchanges in the world. Cryptocurrency is like the wild west of finance, but I expected at least Coinbase was playing fair. Apparently not.

koolba 6y ago
Note that this is 2016 Coinbase. Not 2021, getting ready for IPO, Coinbase.
- loeg 6y ago
  Explicitly, 2015 through 2018.
- throwaway4good 6y ago
  Yeah. Now there is more money in this ipo thing ...
- deleted 6y ago
  [deleted]
peteretep 6y ago
> deliberately generating the appearance of liquidity and demand by placing wash trades What’s bad about that? (not concern trolling, just a noob)
- TylerE 6y ago
  Without liquidity, an asset is worthless. If it's quoted as being worth $100, but there are no actual buyers, it isn't actually worth $100.
  - loeg 6y ago
    You could spoof a large order book without ever wash-trading with yourself (this is not legal advice). The specific regulation is around self-trades. If there is a lot of orders around $99.98 and $100.02 you can be pretty confident something is worth about $100 even if it never trades.
    - deleted 6y ago
      [deleted]
- matheusmoreira 6y ago
  It makes people think the asset is more valuable than it really is.
- ncallaway 6y ago
  If millions of people bought and sold a widget in the last week for ~$10, you can be pretty confident that the widget is (currently) worth around $10. If one person bought or sold a widget in the last week for $10, you might have a lot less certainty about the actual value of the widget.
  - petewailes 6y ago
    Strangely this isn't in fact true. It feels like it should be, but just because something has been consistent historically is not evidence that that's going to continue into the future.
    - Closi 6y ago
      It is evidence, clearly, it’s just not a guarantee.
    - ncallaway 6y ago
      I feel like it's 100% accurate to say 1,000,000 transactions within the last week gives you more confidence than 1 transaction within the last week as to the current market price.
    - JumpCrisscross 6y ago
      > just because something has been consistent historically is not evidence that that's going to continue into the future The technical term is precedent transactions. Less technically, more observations of a thing increases confidence that the thing exists. It does not guarantee that the thing will continue to exist. But then again, nothing does. (We “know” the sun will rise tomorrow because it rose yesterday and the day before that.)
    - lordnacho 6y ago
      It's not a statement about the future, it's about the present. You should indeed be more confident that 10 is the right price right now if you see a load of people near you in time and space trading at 10.
    - TeMPOraL 6y ago
- artursapek 6y ago
  In addition to screwing with price discovery, it also inflates Coinbase Pro’s volumes and makes the exchange look like a better place to trade. Crypto exchanges are often ranked/judged by their volumes.
- hntrader 6y ago
  1- It makes an exchange appear more liquid than competitors, even though it isn't, which gives it an advantage. Customers are tricked into signing up to what they believe is a liquid exchange. It's false advertising. 2- It could trick customers into executing larger trades than what the liquidity is capable of handling without price impact, but this is a more minor point to the above.
- Paradigma11 6y ago
  The liquidity is not there. You might be enticed to buy litecoin since you can be sure to be able sell it anytime without much slippage and then be surprised that there are no buyers.
  - loeg 6y ago
    They weren't spoofing the order book, right? You would look not just at trade volume, but also the bid interest, when considering future liquidity, I think. And that information was all accurate, to my knowledge. (I might be totally wrong! Would love to learn more.)
weird-eye-issue 6y ago
"one of the most regulated exchanges in the world" Is this sarcasm?
- loeg 6y ago
  Implicit in the statement is that this is relative, by the extremely low standard of bitcoin exchanges.
- dataflow 6y ago
  They meant one of the most regulated cryptocurrency exchanges. I don't think that's sarcastic. Try to cite a few that are significantly more regulated.
  - weird-eye-issue 6y ago
    Alright that would be fair then
  - carstenhag 6y ago
    I don't think the statement is fair/correct because we don't know whether it is regulated well/properly at all. We have nothing to compare/benchmark basically, so why call it the "most regulated" one?
derf_ 6y ago
You say that like this stuff does not happen in other regulated contexts: https://www.fca.org.uk/news/press-releases/fca-fines-and-prohibits-trader-market-abuse https://www.fca.org.uk/news/press-releases/fca-fines-and-pro... Without trying to defend Coinbase in particular, isn't the fact that this was caught and punished evidence of the system working as intended? Like, what you would not want to see is a "regulated" market where the regulators never find anything bad going on.
- PragmaticPulp 6y ago
  > You say that like this stuff does not happen in other regulated contexts I didn’t say anything about other regulated contexts? The regulations and enforcement agency exists because this was happening long before cryptocurrency. Cryptocurrency is just uniquely positioned to support techniques like wash trading because it’s much easier to create multiple wallets and transfer funds around in ways that obscure the origin. “Everyone else is doing it” isn’t an excuse.
- sneak 6y ago
  > Without trying to defend Coinbase in particular, isn't the fact that this was caught and punished evidence of the system working as intended? Debatable, as most criminal activity in our society carries with it something more deterring than simply a fine. Having to write a check is what happens when you get sued and lose (a civil issue).
grey-area 6y ago
I think you meant to say 'one of the most regulated cryptocurrency exchanges in the world', in which case this isn't so surprising because the exchanges and currencies in that space are a mess of unregulated and downright fraudulent actors who actively deceive their customers and try to avoid scrutiny (bitfinex is another recently). We should not be surprised by this, it is the norm, and much more fraud and self-dealing will come to light after this bubble bursts.
dave_sullivan 6y ago
Interviewed there once. Would not work there or keep my money there, bunch of jokers.
- mhm776 6y ago
  More info dave...
- gunshai 6y ago
  More info dave...
  - dave_sullivan 6y ago
    I don't think this is the place to discuss details, let's just say I walked away unimpressed by the business and the people I spoke with.
frombody 6y ago
>It's mind boggling that this would happen at one of the most regulated exchanges in the world. I think you're misinterpreting what you are reading. This is not coinbase doing anything, this is an employee taking action on their own, likely not even on company time or on company property. That said, the company is still responsible for the employees' actions, especially because it relates directly to their job.
- ac29 6y ago
  > This is not coinbase doing anything Per the article: "Coinbase recklessly delivered false, misleading, or inaccurate reports concerning transactions in digital assets"
908087 6y ago
You're being sarcastic with the "mind boggling" part, right? I always assumed it was obvious to anyone who was paying attention and didn't intentionally have blinders on, that this was happening across pretty much every cryptocurrency exchange, and has been for years.

koolba 6y ago

Note that this is 2016 Coinbase. Not 2021, getting ready for IPO, Coinbase.

loeg 6y ago
Explicitly, 2015 through 2018.
throwaway4good 6y ago
Yeah. Now there is more money in this ipo thing ...
deleted 6y ago
[deleted]

peteretep 6y ago

> deliberately generating the appearance of liquidity and demand by placing wash trades What’s bad about that? (not concern trolling, just a noob)

TylerE 6y ago
Without liquidity, an asset is worthless. If it's quoted as being worth $100, but there are no actual buyers, it isn't actually worth $100.
- loeg 6y ago
  You could spoof a large order book without ever wash-trading with yourself (this is not legal advice). The specific regulation is around self-trades. If there is a lot of orders around $99.98 and $100.02 you can be pretty confident something is worth about $100 even if it never trades.
  - deleted 6y ago
    [deleted]
matheusmoreira 6y ago
It makes people think the asset is more valuable than it really is.
ncallaway 6y ago
If millions of people bought and sold a widget in the last week for ~$10, you can be pretty confident that the widget is (currently) worth around $10. If one person bought or sold a widget in the last week for $10, you might have a lot less certainty about the actual value of the widget.
- petewailes 6y ago
  Strangely this isn't in fact true. It feels like it should be, but just because something has been consistent historically is not evidence that that's going to continue into the future.
  - Closi 6y ago
    It is evidence, clearly, it’s just not a guarantee.
  - ncallaway 6y ago
    I feel like it's 100% accurate to say 1,000,000 transactions within the last week gives you more confidence than 1 transaction within the last week as to the current market price.
  - JumpCrisscross 6y ago
    > just because something has been consistent historically is not evidence that that's going to continue into the future The technical term is precedent transactions. Less technically, more observations of a thing increases confidence that the thing exists. It does not guarantee that the thing will continue to exist. But then again, nothing does. (We “know” the sun will rise tomorrow because it rose yesterday and the day before that.)
  - lordnacho 6y ago
    It's not a statement about the future, it's about the present. You should indeed be more confident that 10 is the right price right now if you see a load of people near you in time and space trading at 10.
  - TeMPOraL 6y ago
artursapek 6y ago
In addition to screwing with price discovery, it also inflates Coinbase Pro’s volumes and makes the exchange look like a better place to trade. Crypto exchanges are often ranked/judged by their volumes.
hntrader 6y ago
1- It makes an exchange appear more liquid than competitors, even though it isn't, which gives it an advantage. Customers are tricked into signing up to what they believe is a liquid exchange. It's false advertising. 2- It could trick customers into executing larger trades than what the liquidity is capable of handling without price impact, but this is a more minor point to the above.
Paradigma11 6y ago
The liquidity is not there. You might be enticed to buy litecoin since you can be sure to be able sell it anytime without much slippage and then be surprised that there are no buyers.
- loeg 6y ago
  They weren't spoofing the order book, right? You would look not just at trade volume, but also the bid interest, when considering future liquidity, I think. And that information was all accurate, to my knowledge. (I might be totally wrong! Would love to learn more.)

weird-eye-issue 6y ago

"one of the most regulated exchanges in the world" Is this sarcasm?

loeg 6y ago
Implicit in the statement is that this is relative, by the extremely low standard of bitcoin exchanges.
dataflow 6y ago
They meant one of the most regulated cryptocurrency exchanges. I don't think that's sarcastic. Try to cite a few that are significantly more regulated.
- weird-eye-issue 6y ago
  Alright that would be fair then
- carstenhag 6y ago
  I don't think the statement is fair/correct because we don't know whether it is regulated well/properly at all. We have nothing to compare/benchmark basically, so why call it the "most regulated" one?

derf_ 6y ago

You say that like this stuff does not happen in other regulated contexts: https://www.fca.org.uk/news/press-releases/fca-fines-and-prohibits-trader-market-abuse https://www.fca.org.uk/news/press-releases/fca-fines-and-pro... Without trying to defend Coinbase in particular, isn't the fact that this was caught and punished evidence of the system working as intended? Like, what you would not want to see is a "regulated" market where the regulators never find anything bad going on.

PragmaticPulp 6y ago
> You say that like this stuff does not happen in other regulated contexts I didn’t say anything about other regulated contexts? The regulations and enforcement agency exists because this was happening long before cryptocurrency. Cryptocurrency is just uniquely positioned to support techniques like wash trading because it’s much easier to create multiple wallets and transfer funds around in ways that obscure the origin. “Everyone else is doing it” isn’t an excuse.
sneak 6y ago
> Without trying to defend Coinbase in particular, isn't the fact that this was caught and punished evidence of the system working as intended? Debatable, as most criminal activity in our society carries with it something more deterring than simply a fine. Having to write a check is what happens when you get sued and lose (a civil issue).

grey-area 6y ago

I think you meant to say 'one of the most regulated cryptocurrency exchanges in the world', in which case this isn't so surprising because the exchanges and currencies in that space are a mess of unregulated and downright fraudulent actors who actively deceive their customers and try to avoid scrutiny (bitfinex is another recently). We should not be surprised by this, it is the norm, and much more fraud and self-dealing will come to light after this bubble bursts.

dave_sullivan 6y ago

Interviewed there once. Would not work there or keep my money there, bunch of jokers.

mhm776 6y ago
More info dave...
gunshai 6y ago
More info dave...
- dave_sullivan 6y ago
  I don't think this is the place to discuss details, let's just say I walked away unimpressed by the business and the people I spoke with.

frombody 6y ago

>It's mind boggling that this would happen at one of the most regulated exchanges in the world. I think you're misinterpreting what you are reading. This is not coinbase doing anything, this is an employee taking action on their own, likely not even on company time or on company property. That said, the company is still responsible for the employees' actions, especially because it relates directly to their job.

ac29 6y ago
> This is not coinbase doing anything Per the article: "Coinbase recklessly delivered false, misleading, or inaccurate reports concerning transactions in digital assets"

908087 6y ago

You're being sarcastic with the "mind boggling" part, right? I always assumed it was obvious to anyone who was paying attention and didn't intentionally have blinders on, that this was happening across pretty much every cryptocurrency exchange, and has been for years.