New York Attorney General Eric Schneiderman stated today that his agency will conduct a formal investigation into the operations, conflicts of interest, and other significant concerns affecting cryptocurrency investors and consumers. The “Virtual Markets Integrity Initiative” is intended to “…improve transparency and accountability of major cryptocurrency trading platforms to protect virtual currency investors,” according to the official AG office news release. Schneiderman’s office is conducting a “fact-finding probe” by mailing letters to 13 virtual currency trading sites, demanding information about their activities.
“With the growth of cryptocurrencies, consumers in New York and around the nation have a right to openness and responsibility when investing their money.” “However, far too frequently, consumers lack the fundamental information they need to judge the fairness, integrity, and security of these trading platforms,” said Attorney General Schneiderman in a statement. Given that cryptocurrency platforms, or ‘exchanges,’ as they are known, are the entry point for investors to buy, sell, or trade cryptocurrencies such as Bitcoin, Schneiderman’s office is concerned about the amount of sensitive personal information they hold, as well as the vast amount of both virtual and government issued or fiat currency that flows through them.
This decision comes at a time when authorities are increasingly scrutinizing cryptocurrencies, and corporate behemoths like Facebook are facing difficult concerns regarding user data protection. (See also: Bitcoin Price Drops Due to SEC Cryptocurrency Probe)
The Investor Protection Bureau of the Attorney General’s Office made inquiries to the following platforms:
- Coinbase, Inc.
- Gemini Trust Company
- bitFlyerUSA, Inc.
- iFinex Inc. (Bitfinex)
- Bitstamp USA Inc.
- Payward, Inc. (Kraken)
- Bittrex, Inc.
- Circle Internet Financial Ltd. (Poloniex, LLC)
- Binance Limited
- LLP Elite Way Developments (Tidex.com)
- Gate Technology Inc. (Gate.io)
- itBit Trust Company
- Huobi Global Ltd. (Huobi.Pro)
The Attorney General’s Office is requesting that these exchanges complete a questionnaire addressing essential areas of their business. Questions include, among other things, the legal and ownership structure of the exchanges or their parent businesses, how they function, including their fee structure, and their trading regulations and processes.
While the New York Attorney General’s office is well-known for pursuing financial crimes, the probe launched today is only a fact-finding expedition, not a formal investigation. However, in light of reports of millions of dollars being stolen from several crypto exchanges, trading outages, possible market manipulation, and difficulties some customers have had withdrawing funds from their accounts, Schneiderman’s office is attempting to provide “average investors” with a better understanding of the risks and protections associated with these exchanges.
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