The chief compliance officer at a hotly watched bitcoin startup has resigned, shortly after the company came under criticism for its outreach to investors and consumers.
The Washington Free Beacon reported last month that Coinbase, the top-funded bitcoin exchange in the industry, told investors that one of the major advantages of the electronic currency was that it could be used to avoid the impact of international sanctions.
Recent Stories in Issues
Coinbase has called itself the nation’s first regulated bitcoin exchange, standing out in an industry that has previously been viewed as unpredictable and risky for investors and customers. The startup raised $75 million last year from prominent backers, including the New York Stock Exchange.
However, the New York Times reported in January that Coinbase has yet to secure licenses in New York and California. The news prompted criticism from economic experts, who told the Free Beacon that the company’s claim to be regulated appeared to be misleading and could undermine its standing in the industry.
Coinbase’s Chief Compliance Officer Martine Niejadlik stepped down after a little more than a year at the company, Inside Sources reported on Thursday.
A spokesperson for Coinbase said Niejadlik resigned "in order to spend more time with her family."
"We are grateful to Martine for all that she has contributed to Coinbase, and pleased that she has remained connected to the company as an outside consultant," said a company spokesman. "Erin Coppin has been named chief compliance officer for Coinbase, and we couldn’t be more excited to welcome her to her new role."
Coinbase said during a presentation to investors that one of the top advantages of bitcoin was that it was "immune to country-specific sanctions." The company’s customer service also provided guidance on how to transfer the cryptocurrency to sanctioned countries, according to Inside Sources.
Additionally, the Coinbase presentation included logos from top financial regulators—including the New York State Department of Financial Services—that have not yet licensed the company.
"Bitcoin is an entirely decentralized, open payment network; as such, it cannot be controlled by a country or any other central authority," a Coinbase spokesperson told the Free Beacon last month. "This is in stark contrast to traditional fiat currencies and one of the more revolutionary aspects of bitcoin more generally."
But experts said the company’s claims to be the first regulated exchange were misleading.
"I think these are pretty savvy people [at Coinbase] and they’re probably the most upright, compliant, clean-cut people in the whole industry, but it did look like they were trying to pull a fast one on the marketplace with this," David Yermack, a finance professor at New York University’s Stern School of Business told the Free Beacon last month.
Mark Williams, a professor at Boston University who has testified before Congress on bitcoin, said "time will tell, whether [Coinbase is] truly going to be embracing regulation, consumer protection, really caring about the consumer, or are they just going to be just another iteration of these exchanges, which exploit opportunities and take advantage of consumers."