Conversation

SBF
@SBF_FTX
Replying to
@SBF_FTX
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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SBF
@SBF_FTX
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"
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SBF
@SBF_FTX
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.
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SBF
@SBF_FTX
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.
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SBF
@SBF_FTX
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."
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SBF
@SBF_FTX
9) In addition, there's no disclosure here about what "hedger" or "replicator" are, which I'm guessing Coinbase is happy about.
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SBF
@SBF_FTX
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.
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SBF
@SBF_FTX
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.
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Gaussian Process
@GaussianProcess
Replying to
@SBF_FTX
and
@SBF_Alameda
From the order download - "The Replicator operated to maintain liquidity on GDAX and was programmed to replicate third-party orders by market participants in relatively liquid “source” books and then replicate those orders into less liquid “destination” books."
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Gaussian Process
@GaussianProcess
Replying to
@SBF_FTX
and
@SBF_Alameda
I'm not sure, the order doesn't explicitly say My best guess is that someone places e.g. an LTC-USD order, and then the replicator places an LTC-BTC order iirc Coinbase did source from other exchanges pre GDAX, so it's also possible it was replicating books on other exchanges