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12:07 AM · Mar 20, 2021Twitter Web App

2) NOT INVESTMENT ADVICE. NOT LEGAL ADVICE.

3) On its surface, this looks, well... I mean idk how bad it is, but it's not _good_. "Coinbase recklessly delivered false, misleading, or inaccurate reports concerning transactions in digital assets, including Bitcoin, on the GDAX electronic trading platform it operated."

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4) But sometimes... idk, something about an onion.

5) First, the actual accusations aren't that bad. a) they had two bots which traded against each other, but "Hedger and Replicator had independent purposes" b) "The GDAX Trading Rules specifically disclosed that Coinbase was trading on GDAX"

6) c) The actual manipulative behavior came from an ex employee, not the company, and given the lack of cited magnitudes, I'm guessing it wasn't that big.

7) But beyond that, this isn't the type of notice the CFTC publishes if they're gearing up for war. This is what they publish when things are settled. Not just this charge, but probably most charges.

8) I don't have any background information here! But this seems most consistent with, roughly, "Coinbase had to do 200 things to go public. One was settling all disputes with US regulators. They just checked that one off."

9) In addition, there's no disclosure here about what "hedger" or "replicator" are, which I'm guessing Coinbase is happy about.

10) [COMPLETE SPECULATION] My guesses? Hedger: retail buys 1 BTC on the Coinbase mobile app (paying 5%!). Coinbase internalizes, then "hedger" slowly buys back on the Coinbase orderbook.

11) Replicator: retail buys 1 BTC on the Coinbase mobile app (paying 5!). "Replicator" buys 1 BTC immediately on the Coinbase orderbook. Hedger would trade with Replicator if retail had been net buying but then someone sold, and one of the two (hedger, probably) was providing.

12) Anyway, TL;DR: think about what Coinbase would be valued at if it had someone like

@elonmusk

as its public face!

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