Coinbase hires former NYSE exec for program to police its markets



Coinbase CEO Brian
Armstrong.

Anthony Harvey /
Stringer


  • Coinbase has brought on a former New York Stock
    Exchange executive to build out a platform to monitor its
    crypto markets.
  • It’s the latest sign that crypto trading venues are
    aiming to look more like equity markets to mollify regulators’
    anxieties.

Coinbase, the cryptocurrency exchange operator, is building out a
platform meant to better monitor its markets.

The San Francisco-based firm has brought on Peter Elkins, a
former executive at the New York Stock Exchange, to lead the
efforts. Elkins, who previously was head of market surveillance
at the Big Board, is building out a team for what is known as the
Coinbase Trade Surveillance Program, Elkins told Business Insider
in an interview.

The point of the new program will be to create a best-in-class
platform to police Coinbase’s markets, which include its retail
brokerage and two professional exchange venues, Elkins said.

“This is similar to the projects I worked on at NYSE,” Elkins
said. “We are going to be deploying human insights and technology
to weed out bad actors.”

It’s striking that Coinbase is going in-house to develop such a
program considering its New York-based rival Gemini opted to
partner with the equities exchange behemoth Nasdaq for its
surveillance efforts.

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As Business Insider previously reported, Gemini is using Nasdaq’s
Smarts, a surveillance technology used across Wall Street, to
identify unusual and potentially criminal trading behavior on its
venue.

Similarly, Coinbase’s program is intended to better identify
unusual activity including spoofing, a way to manipulate markets
by sending fake orders, as well as wash trading, Elkins said.

The news of Elkins’ hire comes as questions of market
manipulation in crypto markets have reached a fever pitch
Notably, Bloomberg
published a report examining more than 50,000 trades on Kraken’s
market that experts said raised red flags
. Specifically, they
said it was unusual that large tether trades failed to affect
pricing on the venue.
Kraken mocked the claims in the report in a blog post
.

Elsewhere, academics at the University of Texas published

a paper alleging that Tether was last year used to manipulate the
price of bitcoin
, propping up its run to $20,000 in December.

Regulators have expressed concern over the possibility of rigged
markets in crypto. And the moves by Gemini and Coinbase
illustrate the degree to which crypto trading firms are trying to
mollify their concerns.

The New York Attorney General’s Office in April sent out letters
to 13 cryptocurrency exchange operators as part of a
broader crypto fact-finding mission aimed at protecting investors
in the nascent market for digital coins
. The office requested
information from crypto exchanges about manipulation, system
failures, consumer protection, and other issues.

Initiatives to better monitor crypto markets could also help lure
new investors to the market, says Jay Biondo, a product manager
at Trading Technologies.

“Having effective surveillance is a key selling point,” Biondo
said. “Exchanges that announce that they are monitoring for
spoofing, wash trading, momentum ignition, and other manipulative
activity will likely attract more investors because those
investors will feel more confident that they are trading in a
fair and efficient market.”

Before joining NYSE’s market-watch team in 2015, Elkins was a
designated market maker on the floor of the exchange for over a
decade, holding positions at both Barclays and LaBranche &
Co.

Numerous other Coinbase employees previously worked at NYSE,
including Christine Sandler and Eric Scro.

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