Coinbase To Share User Data with CFTC
Coinbase may share user data with CFTC due to a subpoena linked to an investigation involving Bybit.
Coinbase, a leading U.S. cryptocurrency exchange, faces a legal challenge that may lead to the sharing of its users’ Bitcoin trading data with the Commodities Futures Trading Commission (CFTC). This development emerged after the exchange received a subpoena linked to an investigation involving Bybit, a Dubai-based crypto exchange.
Despite having no direct connection to Bybit, numerous Coinbase users reported receiving emails indicating their personal account data might be disclosed to the CFTC. The exact nature of the subpoena and the scope of data requested remain unclear, as Coinbase has yet to make a public statement on the matter. However, sources suggest that the subpoena is indeed real and pertains to a larger investigation involving Bybit.
Coinbase is currently contemplating a legal response to the subpoena, with a deadline looming at the end of November. Insiders reveal that Coinbase is negotiating with the CFTC to possibly limit the data shared. Amidst this legal turmoil, Coinbase’s stock has been performing remarkably well, with shares on the Nasdaq (COIN) reaching their highest value since the Terra crash in May 2022.
Impact on Users
The subpoena has raised concerns among Coinbase users, especially those who have never used or associated with Bybit. Many are questioning why federal authorities are targeting their data. This confusion is compounded by Coinbase’s decision to not comment on the specifics of the case. The CFTC also remains silent on the matter.
This situation comes in the backdrop of increasing regulatory actions against crypto exchanges. The CFTC has a history of suing exchanges for not adhering to Know-Your-Customer (KYC) norms, illegally operating digital asset derivatives exchanges, and offering futures trading without proper registration. Just last week, Binance settled with U.S. authorities, including the Department of Justice, agreeing to a substantial fine for violating CFTC regulations.
Bybit, the exchange at the center of the subpoena, only started implementing KYC standards across its services earlier this year. The link between American users’ Coinbase accounts and Bybit could potentially help the CFTC establish that American customers accessed Bybit’s services without proper identification. However, authorities have not initiated any legal action against Bybit yet.