How does Coinbase prevent, control and regulate “internal ghost behavior”?


Encrypted people money , one of the most common misconception is that this area is not regulated, and full of market manipulation, insider trading, and malicious people. But this is far from the truth. Cryptocurrency is highly regulated, and outstanding practitioners are cooperating with regulatory agencies around the world to ensure the safety of customers’ funds .

Coinbase is regulated by more than 50 regulatory agencies in the United States alone. Globally, this number is even higher. In order to win the trust of customers, Coinbase must not only comply with the highest level of regulations, but also strive for excellence in terms of internal control and employee code of conduct.

Since Coinbase was founded in 2012, it has been committed to compliance. This includes a series of internal controls around data protection, continuous training courses and sound policy documents . Among these policies, the most important is Coinbase’s “Insider Trading Policy  : This document defines how and when Coinbase employees, consultants, contractors, and the board of directors can trade and what assets. The purpose is to ensure that these people are Advance transactions cannot be performed in the case of public information (MNPI).


Like all public companies, Coinbase restricts the time that employees and other insiders can buy and sell the company’s stock.

For example, employees are only allowed to trade within a very short trading window: after Coinbase’s public conference call, when they do not possess material non-public information (MNPI), or pass the pre-approved U.S. Securities Act’s 10b5-1 insider trading rules Under the trading plan.

Similarly, when it comes to cryptocurrencies, Coinbase’s insider trading policy is designed such that no one related to the company can use non-public information to trade crypto assets (including NFTs ) . This non-public information includes an asset that may be added or deleted from Coinbase’s trading platform, Coinbase will provide new features or services based on an asset (this may include such as pledge or product integration), or other positive or negative information that may affect The price of the asset.

To ensure that employees and others within the scope of this policy clarify this requirement, Coinbase has a regularly updated list of restricted digital assets. In addition, for executives and related employees with important information in hand, the regulations also include supplementary supervision, such as quarterly certificates, pre-disclosure of transactions conducted on the Coinbase trading platform, and additional monitoring.

In addition, Coinbase also requires that all employees and board members can only conduct crypto transactions on Coinbase’s trading platform (unless the assets they wish to trade are not supported in the region where Coinbase is located). This extra step is important for two reasons:

First of all, this means that Coinbase can proactively disable the trading of certain assets for certain employees at certain times;

Secondly, it also means that you can fully understand the trading behavior of employees and the board of directors – which is the traditional exchange important difference and spot markets, traditional exchanges and stock markets tend to encourage employees trading platform outside of his work.

Require employees to only trade on the Coinbase platform, and allow Coinbase’s transaction monitoring team to monitor prohibited trading activities, such as market manipulation . Market manipulation can take many forms, but in a broad sense it refers to actions taken by any market participant, or actions taken by someone and that participant in unison. The purposes of these actions include:

  • Deceive or mislead other traders;
  • Artificially control or manipulate the price or transaction volume of assets;
  • Helping, instigating, funding, or supporting any of the above actions, including operations inside and outside the Coinbase exchange.

Very similar to traditional financial markets, the specific forms of market manipulation prohibited by Coinbase include:

  • Whitewash / down bin (Wash trading): a kind of market manipulation in the form that investment by simultaneously trading the same financial instrument, resulting in misleading human activity in the market.
  • Trading deception: A practice that attempts to push the market in a specific direction by issuing false quotations to execute the reverse order that you really want to make, and then cancel the malicious order .
  • Transaction layering: Influencing or promoting the direction of the market through malicious orders, so that real orders can be executed. The key difference from “trading fraud” is that instead of placing fake orders at the top of the order book, multiple orders are entered at different price points.
  • Runaway transaction: The act of executing a transaction (buy or sell) when you know that a transaction or group of transactions will follow up soon.
  • Disrupt trading: A trader or broker executes a transaction for an investment account in order to receive a commission from the account.
  • Quotation filling: A form of market manipulation used by API or algorithmic traders to try to enter the market with rapid entry and withdrawal of a large number of orders.

Coinbase attaches great importance to transaction monitoring. Participants in its transaction monitoring team are former regulators and compliance personnel from multinational companies, investment banks and broker-dealers, technology companies, and encryption experts.

People + technology

The underlying technology of Coinbase’s transaction monitoring team is called Eventus. It uses artificial intelligence and machine learning to provide all-weather monitoring on all Coinbase trading platforms and can quickly take action, which cannot be achieved by manual tracking alone. The traditional market monitoring is usually to collect evidence after the fact.

Coinbase’s goal is to provide customers with the most trusted and safe place to access the encrypted economy. Compliance, market integrity, and oversight are the core components of this approach and will continue to increase over time.

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