New York Attorney General Barbara D. Underwood releases a report on cryptocurrency markets

On 18th September, the State of New York Attorney General, Barbara D. Underwood released a report on Virtual Markets Integrity Initiative. According to the report, the initiative was launched with the aim of protecting the investors who are involved in cryptocurrency trading.

The report speaks about the exchange platforms which offer cryptocurrency services to the investors. The Office of Attorney General [OAG] stated that as a part of the initiative they sent out a letter to exchanges for inquiring the policies and practices of the cryptocurrecy exchange platforms. The inquiry focused on details regarding the site outages, trading fees and consequence of bot trading.

The inquiry which was launched in the month of April 2018 had created a lot of controversy in the cryptoverse. It was launched by the former Attorney General of New York, Eric T. Schneiderman. The OAG had stated that they will release a report based on the information collected through the inquiry. It was sent to over 13 exchanges which includes exchange platforms such as Kraken, Coinbase, Bittrex, Bifinex, Gate.io and Huobi.

The main topics which were covered in the inquiry included information regarding the ownership and control, internal controls, trading policies and practices, basic operations and fees, outages and other suspensions of trading, privacy and money laundering, protection against risk to customers and written materials of the exchange platform.

The inquiry resulted in both positive and negative responses in the community. Kraken, one of the leading cryptocurrency exchange platform, openly dissented the inquiry and the CEO of the platform, Jesse Powell called it an “abuse”. The CEO continued to say that they made a wise decision by shifting out of New York as they can “dodge” the inquiry. However, exchanges such as Coinbase had a positive response to the inquiry.

In addition, the report states that the inquiry which was launched saw a positive response from 9 exchange platforms, out of the 13 exchanges that the inquiry form was sent to. The OAG states that the exchanges which voluntarily participated includes:

  • Bitfinex
  • Bitstamp
  • bitFlyer USA
  • Bittrex
  • Coinbase
  • Gemini
  • iBit
  • Poloniex
  • Tidex
  • HBUS, a strategic partner of Huobi

The exchange platforms which did not participate in the inquiry are:

  • Binance
  • Gate.io
  • Huobi Global Limited
  • Kraken

The report states that these exchanges refused to participate in the inquiry because they did not offer trading services from New York. However, this resulted in the exchange platform being called out by the NYAG for possible unlawful operations.

From the information collected by the cryptocurrency exchange platform, the OAG outlined that the business roles and operational roles of trading platforms create potential conflict of interest. In addition, it stated that the trading platform has not taken effective measures to identify and stop suspicious trading and that the protection for customer funds are “often limited”.

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