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The New York Office of the Attorney General (OAG) this week published a report on the results of the Virtual Markets Integrity Initiative launched in April 2018.
In April 2018, the Attorney General’s office sent letters to 13 major crypto trading platforms requesting key information on their operations, internal controls, and safeguards to protect customer assets. Nine of these platforms – Bitfinex, bitFlyer USA, Bitstamp, Bittrex, Coinbase, Gemini Trust Company, itBit, Poloniex, and Tidex – participated in the initiative.
The OAG separately invited HBUS to respond, as the platform opened for trading in July 2018. HBUS also took part in the initiative.
Four platforms – Binance, Gate.io, Huobi Global Limited, and Kraken – declined to participate, saying that they do not allow trading from New York. The Attorney General’s office particularly highlighted Kraken’s public response on the matter, calling it “alarming”:
“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.”
In its report, the OAG said that it has found many platforms vulnerable to abusive trading, conflicts of interest, and other consumer risks.
“New Yorkers deserve basic transparency and accountability when they invest – whether on the New York Stock Exchange or on a cryptocurrency platform. Yet, as our report details, many virtual currency platforms lack the necessary policies and procedures to ensure the fairness, integrity, and security of their exchanges,” said Attorney General Barbara D. Underwood.
“With this report, we hope to give New Yorkers the tools they need to make educated decisions on whether to entrust their money to a cryptocurrency platform and to help protect themselves against theft, fraud, and abuse.”
According to the official release, the Attorney General's office has referred three platforms – Binance, Gate.io, and Kraken – to the New York State Department of Financial Services (NYDFS) for possibly operating unlawfully in New York.
