CFTC Asks for Data on Some Coinbase Users

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  • Coinbase has alerted users about a subpoena from the Commodity Futures Trading Commission (CFTC) asking for information on certain users
  • The information sought is possibly related to the crypto exchange Bybit but this link is unclear
  • Coinbase is considering fighting the subpoena and has until November 30 to do so

Coinbase has notified certain users about a subpoena from a U.S. regulator potentially regarding the crypto exchange Bybit, as revealed in emails shared on social media. According to the email, Coinbase may respond to the subpoena from the Commodity Futures Trading Commission (CFTC) unless served before November 30, 2023, with a motion to quash the request. Bybit recently quit Canada and the UK following regulatory changes with which it could not comply, although there is evidence to suggest that Bybit may not be the link.

Bybit Link Unclear

In a letter to affected users, Coinbase stated that it had been “served with a subpoena…seeking information related to your account and account transaction activity,” with Bybit initially thought to be the link to connect those whose information is sought. However, there are indications that some users who have never used Bybit also received the subpoena notice.

Bybit, led by CEO Ben Zhou, is based in Dubai and recently quit Canada and the UK following regulatory changes, leading to the possibility that the CFTC is investigating the leverage trading exchange over its US activities. In the emails, Coinbase mentioned the possibility of protesting the subpoena in court before the November 30 deadline. However, it appears that Coinbase will more likely collaborate with the CFTC to limit the scope of information it is seeking.

Coinbase to Follow Kraken Approach?

Kraken successfully used this approach when dealing with the Inland Revenue Service (IRS) in 2021, successfully reducing the scope of the IRS’ investigation, which originally sought more extensive data, including users’ IP addresses, employment information, sources of wealth, net worth, and banking particulars. 

The CFTC has investigative powers, including issuing subpoenas, as outlined in its enforcement manual, while Coinbase, in compliance with laws and regulations, may access and disclose information in response to legal requests.