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How does Coinbase self-regulate wash trading?

JumpCrisscross 5y ago
> How does Coinbase self-regulate wash trading? Coinbase follows KYC laws. That prevents one person from opening two accounts and trading between them.
- tw600040 5y ago
  Huh. What if 2 people decide to do it?
  - JumpCrisscross 5y ago
    > What if 2 people decide to do it? Two accounts trading back and forth will light up anti-spoofing tech from the 1980s. Keep in mind that the AML regulations Coinbase follows are specifically designed to catch fake money movement.
    - bduerst 5y ago
      Anti-spoofing tech for regulated securities. There's no rules for crypto to suggest that Coinbase needs to (or would) flag a group of individuals doing this.
      - JumpCrisscross 5y ago
        > Anti-spoofing tech for regulated securities. There's no rules for crypto to suggest that Coinbase needs to (or would) flag a group of individuals doing this. It's the same stuff that catches money laundering. Coinbase isn't exempt from anti-money laundering laws. (With respect to Coinbase not being subject to the Exchange Act, that's very much an open, if irrelevant to this discussion, question.)
        bduerst 5y ago
        I don't see how that is relevant here. Wash trading is market, price, and reputation manipulation, not money laundering or tax evasion. I'm not sure Coinbase's need to report money laundering applies.
        JumpCrisscross 5y ago
        > Wash trading is market, price, and reputation manipulation, not money laundering or tax evasion A lot of money laundering involves wash trading. That's why institutions like Coinbase have systems in place to detect it. Non-laundering wash trades would get flagged by such a system. If it were systemic, it would almost certainly merit a SAR.
        bduerst 5y ago
        >A lot of money laundering involves wash trading. Citation needed, because wash trading and money laundering are not mutually inclusive. There are not controls in place for money laundering that detect wash trading, because crypto is not a regulated security.
  - discodave 5y ago
    Pretty sure that none of the honest and upstanding people in the crypto-world would attempt to circumvent regulations like that! /s
- discodave 5y ago
  Does that mean they don't try to prevent a group of individuals coordinating wash trading between their accounts?
  - JumpCrisscross 5y ago
    > Does that mean they don't try to prevent a group of individuals coordinating wash trading between their accounts? To wash trade effectively for more than a single instance one needs hundreds to thousands of accounts. Somebody could coördinate that many people. But it's hard. And it creates exhaust lights up law enforcement radars, as it's practically indistinguishable from money laundering.

> How does Coinbase self-regulate wash trading? Coinbase follows KYC laws. That prevents one person from opening two accounts and trading between them.

tw600040 5y ago
Huh. What if 2 people decide to do it?
- JumpCrisscross 5y ago
  > What if 2 people decide to do it? Two accounts trading back and forth will light up anti-spoofing tech from the 1980s. Keep in mind that the AML regulations Coinbase follows are specifically designed to catch fake money movement.
  - bduerst 5y ago
    Anti-spoofing tech for regulated securities. There's no rules for crypto to suggest that Coinbase needs to (or would) flag a group of individuals doing this.
    - JumpCrisscross 5y ago
      > Anti-spoofing tech for regulated securities. There's no rules for crypto to suggest that Coinbase needs to (or would) flag a group of individuals doing this. It's the same stuff that catches money laundering. Coinbase isn't exempt from anti-money laundering laws. (With respect to Coinbase not being subject to the Exchange Act, that's very much an open, if irrelevant to this discussion, question.)
      - bduerst 5y ago
        I don't see how that is relevant here. Wash trading is market, price, and reputation manipulation, not money laundering or tax evasion. I'm not sure Coinbase's need to report money laundering applies.
        JumpCrisscross 5y ago
        > Wash trading is market, price, and reputation manipulation, not money laundering or tax evasion A lot of money laundering involves wash trading. That's why institutions like Coinbase have systems in place to detect it. Non-laundering wash trades would get flagged by such a system. If it were systemic, it would almost certainly merit a SAR.
        bduerst 5y ago
        >A lot of money laundering involves wash trading. Citation needed, because wash trading and money laundering are not mutually inclusive. There are not controls in place for money laundering that detect wash trading, because crypto is not a regulated security.
- discodave 5y ago
  Pretty sure that none of the honest and upstanding people in the crypto-world would attempt to circumvent regulations like that! /s
discodave 5y ago
Does that mean they don't try to prevent a group of individuals coordinating wash trading between their accounts?
- JumpCrisscross 5y ago
  > Does that mean they don't try to prevent a group of individuals coordinating wash trading between their accounts? To wash trade effectively for more than a single instance one needs hundreds to thousands of accounts. Somebody could coördinate that many people. But it's hard. And it creates exhaust lights up law enforcement radars, as it's practically indistinguishable from money laundering.