- Crypto exchange giant Coinbase started setting up an internal trading desk last year, according to the Wall Street Journal.
- Coinbase reportedly abandoned the idea after a $100 million trial as senior traders hired to run the unit left the company.
U.S. cryptocurrency exchange Coinbase started setting up an internal crypto trading desk last year despite previous assurances to Congress that it was not running a proprietary trading business, the Wall Street Journal reported today.
The report, which cites unnamed internal sources, says the firm hired senior Wall Street traders to helm the effort to invest the company’s own funds in crypto trading activities.
Proprietary trading by exchanges is frowned upon by regulators as it can constitute a conflict of interest. Internal trading desks can lead to exchanges trading against their customers and can lead to significant client losses.
Last December, Coinbase executives appeared before Congress to state that they were not running a proprietary trading business. Prior to this, the platform had established a business unit for trading crypto on behalf of clients called Coinbase Risk Solutions and in 2022 this unit completed a $100 million crypto transaction from which it profited, according to the WSJ.