Coinbase denies trading cryptocurrencies for its own account

NEW YORK: Coinbase Inc, one of the biggest US cryptocurrency exchange operators, denied engaging in proprietary trading after New York’s attorney general said the firm accounted for almost 20% of transactions on its own platform.

San Francisco-based Coinbase doesn’t trade for its own account, Mike Lempres, the firm’s chief policy officer, wrote in a blog post on late Wednesday titled “Correcting the record.”

Instead, the transactions are executed on behalf of retail clients who use its Coinbase Consumer service, Lempres wrote.

“When Coinbase executes these trades, it does so on behalf of Coinbase Consumer customers, not itself,” he wrote, adding that the firm volunteered the information cited by the New York attorney general in a report on crypto exchanges released on Tuesday.

The attorney general’s report warned that many virtual currency platforms “lack the necessary policies and procedures to ensure the fairness, integrity, and security of their exchanges.”

The 20% statistic for Coinbase was mentioned in a section 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 wrote.

“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 doesn’t operate a proprietary trading desk and isn’t a market maker, according to Lempres.

“We welcome oversight and will continue to work with regulators to promote the cryptocurrency ecosystem,” he wrote. — Bloomberg