Two accounts trading back and forth will light up anti-spoofing tech from the 1980s. Keep in mind that the AML regulations Coinbase follows are specifically designed to catch fake money movement.
Anti-spoofing tech for regulated securities. There's no rules for crypto to suggest that Coinbase needs to (or would) flag a group of individuals doing this.
> Anti-spoofing tech for regulated securities. There's no rules for crypto to suggest that Coinbase needs to (or would) flag a group of individuals doing this.
It's the same stuff that catches money laundering. Coinbase isn't exempt from anti-money laundering laws. (With respect to Coinbase not being subject to the Exchange Act, that's very much an open, if irrelevant to this discussion, question.)
> Wash trading is market, price, and reputation manipulation, not money laundering or tax evasion
A lot of money laundering involves wash trading. That's why institutions like Coinbase have systems in place to detect it. Non-laundering wash trades would get flagged by such a system. If it were systemic, it would almost certainly merit a SAR.
Citation needed, because wash trading and money laundering are not mutually inclusive. There are not controls in place for money laundering that detect wash trading, because crypto is not a regulated security.
> Does that mean they don't try to prevent a group of individuals coordinating wash trading between their accounts?
To wash trade effectively for more than a single instance one needs hundreds to thousands of accounts. Somebody could coördinate that many people. But it's hard. And it creates exhaust lights up law enforcement radars, as it's practically indistinguishable from money laundering.
