Coinbase counters WSJ claim its Risk Solutions group engaged in $100M proprietary trade

cointelegraph.com:

The Wall Street Journal and Coinbase are having differences over definitions. The newspaper published an alleged account of the digital asset exchange’s trading activities earlier this year that it claims amount to proprietary trading. Coinbase responded in a blogpost that it had done no such thing.

Relying on information supplied by “people at the company,” the WSJ wrote on Sept. 22 that Coinbase made a $100-million transaction that was viewed inside the company as a test trade by the company’s Risk Solutions group, which had been formed for the purpose of proprietary trading. Proprietary trading is the practice by banks and financial institutions of trading their own money for their own gain, rather than doing so to earn a commission from a client.

It would not have been illegal for Coinbase to engage in proprietary trading, the WSJ noted, but it could still be a matter of concern. An institution could trade against the interests of its clients, for example. Coinbase said in its blogpost that “Coinbase does not operate a proprietary trading business or act as a market maker,” although “many of our competitors” do engage in proprietary trading.” The blogpost stated:

The source of the controversy is testimony given by Alesia Hass, CEO of Coinbase’s U.S. subsidiary and chief financial officer of Coinbase Global, before the United States House of Representatives Committee on Financial Services on Dec. 8, 2012, in which she stated, as quoted in the WSJ, “We do not engage in proprietary trading on our platform.”

Related: Institutional staking won’t take off unless asset lock-up solved: Coinbase CFO

Coinbase made the $100-million transaction in question using money raised through a structured note that was sold to Invesco Ltd.