Coinbase is an exchange and wallet service provider a lot of users have grown to like over the past few years. At the same time, there are a lot of people who aren’t too happy with Coinbase, for various reasons. It turns out the U.S. Commodity Futures Trading Commission (CFTC) is conducting an unofficial inquiry related to Coinbase, which raises a lot more questions than it provides answers. This turn of events will cause some confusion, to say the least.
CFTC Shows a Keen Interest in Coinbase
The past 18 months have been rather interesting for the Coinbase platform, to say the least. Not only has it seen exponential growth in its customer base, there is also the matter of the IRS summons which still isn’t off the table entirely. It was only a matter of time before the US government started showing an interest in Coinbase for various reasons, although it remains to be seen how the summons will play out in the near future.
To top things off, there is now a CFTC inquiry related to Coinbase regarding a recent Ethereum flash crash on the GDAX platform. At the time, the Ethereum price saw a multi-million dollar sell-off that collapsed the market for a brief moment. This occurred only on the Coinbase-owned GDAX exchange, which caused a lot of unrest among platform users for quite some time afterward. With the incident taking place on July 21, it was only a matter of time before the U.S. government would scrutinize this turn of events.
For the time being, it remains to be seen how the CFTC inquiry will play out. Not too many details are being made public right now, but it does appear this is the real deal. Without any public evidence to back up these claims, however, there will be a lot of speculation as to what the CFTC wants with Coinbase and GDAX, let alone how the regular order of business will be affected for both platforms.
Coinbase has no choice but to comply with regulations and has always been cooperative when it comes to inquiries like this. That being said, the GDAX market crash is still pretty controversial to this day. After all, it saw the Ethereum price drop to very low levels, immediately filling some low buy orders on the platform. Once the price had corrected itself, the people who placed those buy orders got rich in a matter of minutes. Eventually, Coinbase was forced to refund the customers who had been negatively affected.
The big question is whether or not leverage and margin trading may have played a role in this market crash. A lot of people rely on leverage and margin trading as a way to speculate on the market, but it can also cause some unprecedented effects when things go south in short order. Thankfully, such incidents are more the exception than the rule these days, but it is still a memorable event in the world of cryptocurrency as a whole.
With margin trading services discontinued by Coinbase shortly after the crash, it will be interesting to see what the CFTC plans to do moving forward. It makes a lot of sense to investigate what has happened exactly, even though all affected parties have been refunded and no real damage was done in the long run. For now, this investigation is still unofficial and details remain scarce to come by. It is an interesting turn of events in the world of cryptocurrency; that much is certain.