Cryptocurrency exchange operator Coinbase Inc. acknowledges paying $6.5 million to reach an agreement and settle an investigation by the CFTC, about the regulatory claims that reported misleading information about its trading volumes.

Last year Coinbase filed plans to go public, to resolve the Commodity Futures Trading Commission’s (CFTC) investigation without declaring any stance on the regulator’s claims. The outcome unloads one cloud hanging over Coinbase, as it prepares them to become a public company through a direct listing on the American stock exchange, Nasdaq Stock Market.

Coinbase to Settle CFTC Investigation

Coinbase issued a statement stating that “The investigation didn’t allege any harm to customers. We proactively engaged with the CFTC throughout their investigation, and we believe that our conversations were constructive and contributed to an outcome that is satisfactory for both parties.”

The enforcement action shows how Wall Street regulators such as the CFTC, which oversees derivatives markets, have moved to police conduct in the new world of cryptocurrencies and digital assets.

Dawn Stump, a Republican and CFTC Commissioner, mentioned in a statement that she supports the enforcement action but equally worried that it sends a manipulative message about the agency’s authority to regulate bitcoin exchanges like Coinbase. CFTC can track fraud and manipulation in cash markets for commodities such as bitcoin, but its core authority is limited to derivatives markets.

How Crypto-Trading be Taxed

According to CFTC, Coinbase incorporates those trades in figures that disseminate volume and price information about Bitcoin to the public. This means traders could have received a misleading sense of volume on Coinbase Pro.

The CFTC in the same order claimed that a former Coinbase employee was engaged in similar conduct, which the agency deemed to be wash trading. Wash trading is a prohibited tactic that relates to the intentional submission of buy and sells orders that match, thereby creating a trade. But without a change in ownership of the asset.

Wash trading is prohibited as it creates a misleading appearance of trading volume and can misguide others into believing that there is more liquidity than there really is.

Wash trades occur in the Bitcoin-Litecoin trading pair during a period of six weeks in 2016, CFTC reports.