The Attorney General of New York isn’t happy about how cryptocurrency exchanges have been conducting business, and most especially in regard to protecting their consumers from the ills of market manipulation.
In a 32-page report titled “Virtual Markets Integrity Report” that was released after vigorous investigation that lasted for some months, New York State Attorney General stated that cryptocurrency exchanges lack the standard to protect its traders and investors against manipulative tendencies associated with the market.
Some of the hallmark of the report is that there is no fairness, transparency and security of traders of cryptocurrencies in crypto exchanges and that little is been done to protect the traders the report stated.
“The industry has yet to implement serious market surveillance capacities, akin to those of traditional trading venues, to detect and punish suspicious trading activity.”
Eric Schneiderman, the former Attorney General started the investigation in April which Barbara Underwood’s the new Attorney General continued.
Even though the investigation was meant to answer questions on what cryptocurrency exchanges are doing to protect customers funds and promote transparency, only 10 exchanges answered with four refusing to appear which includes Kraken whose CEO Powell Jesse stating in a tweet then that the AG’s scrutiny was “tone deaf” and “insulting.”
Other culpable exchanges that do not have the BitLicense to operate in New York are Gate.io and Binance even though New Yorkers are still using them against the Virtual currency regulations rule of the State.
Based on the results of our report, we have also referred three platforms – Binance, https://t.co/UEMbx5VSWm, and Kraken – to the New York State Department of Financial Services for possibly operating unlawfully in New York.
— NY AG Underwood (@NewYorkStateAG) September 18, 2018
The Attorney General Office also said in the report that:
“In announcing the company’s decision not to participate in the Initiative, Kraken declared that market manipulation ‘doesn’t matter to most crypto traders,’ even while admitting that ‘scams are rampant’ in the industry.”
The report also stated that due to inadequate “consistent and transparent approach” customers could lose their funds since the exchanges do not audit their users.
“Customers are highly exposed in the event of a hack or unauthorized withdrawal,” the report said. “There are serious questions about the scope and sufficiency of the commercial insurance that certain platforms purport to carry to cover virtual asset losses.”
The report noted that not all crypto exchanges does not offer support to their customers. Hence, that exchanges differ in “comprehensiveness in responding to the risks facing the virtual markets and fulfilling their responsibilities to customers.”
Bitcoin entered the market a decade ago, being the first ever true cryptocurrency. In 2017, the crypto’s price shot up to within the $20,000 range. However, the peak wasn’t to last long and the coin has since shed off most of its December 2017 value. At the moment, Bitcoin is trading within the $6,300 range, which means that more than half of its value in January is now gone.
As a matter of fact, market regulators like SEC have always been wary of cryptos because of possible market manipulation. That’s one of the major reasons why SEC is yet to approve a Bitcoin ETF despite numerous proposals tabled by various entities – including the Winklevoss brothers.