New York AG scrutinizes crypto exchanges
The state attorney general has asked 13 trading platforms to share how they protect traders.
New York Attorney General Eric T. Schneiderman has launched a “fact-finding” inquiry into how well customers’ assets are protected by the operations, internal controls and safeguards of popular cryptocurrency exchanges GDAX, Gemini, bitFlyer, Bitfinex, Bitstamp, Kraken, Bittrex, Poloniex, Binance, Tidex, Gate.io, itBit and Huobi.Pro.
The added scrutiny is part of what the AG’s office calls the Virtual Markets Integrity Initiative.
“With cryptocurrency on the rise, consumers in New York and across the country have a right to transparency and accountability when they invest their money. Yet too often, consumers don’t have the basic facts they need to assess the fairness, integrity and security of these trading platforms,” Schneiderman said.
The move was prompted by the growth of the cryptocurrency industry and the security issues that have plagued it in recent years, particularly prominent hacking-related thefts, technical bugs and outages, possible market manipulation, withdrawal issues and inconsistency in disclosures of risks, rules and safeguards.
The exchanges are being asked to return questionnaires that ask each platform about ownership and control, basic operation and fees, trading policies and procedures, outages and other suspensions of trading, internal controls, and privacy and money laundering protections.
The goal of the inquiry, however, is not to crack down on cryptocurrency trading in the US.
“The challenge with virtual currency is to prevent fraud and other abuses, safeguard market integrity and protect individual investors — without stifling legitimate market activity or innovation,” the letter to the exchanges reads.
So far, American regulators haven’t gone as far in their warnings as their counterparts in other countries. South Korea, for instance, just ordered a dozen exchanges to rewrite their user contracts, and Kraken is shutting down its service for Japanese customers.
Disclosure: At the time of writing, the author holds XRP, CND, ANT and DRGN, and actively trades BTC and ETH.
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