In a move it says is designed to “improve accountability of major cryptocurrency trading platforms [and] protect virtual currency investors” the office of New York Attorney General Eric T. Schneiderman (OAG) has asked most of the big name crypto exchanges operating in the US for detailed information on their operations, internal controls, and customer asset protection. Amongst the trading platforms targeted were Coinbase, Gemini, bitFlyer, Bitfinex, Bitstamp, Payward, Kraken, Bittrex, Poloniex, Binance and itBit.
“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," said Schneiderman. “Yet too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms.” Describing the move as a “Virtual Markets Integrity Initiative” he says the goal is ensuring that enforcement agencies, investors, and consumers have the information they need to understand the practices and the risks of trading on a crypto exchange.
The OAG cites reports of the theft of vast sums of virtual currency from customer accounts, sudden and poorly explained trading outages, possible market manipulation, and customers having difficulties when withdrawing their funds as invoking the Attorney General’s statutory duty to “protect consumers and ensure the fairness and integrity of the financial markets.”
Via a questionnaire, the exchanges have been asked for information across six major topic areas, including:
(1) Ownership and Control
(2) Basic Operation and Fees
(3) Trading Policies and Procedures
(4) Outages and Other Suspensions of Trading
(5) Internal Controls
(6) Privacy and Money Laundering.
Among other areas of interest, the questionnaires request that platforms describe their approach to combating suspicious trading and market manipulation; their policies on the operation of bots; their limitations on the use of and access to non-public trading information; and the safeguards they have in place to protect customer funds from theft, fraud, and other risks.
The Attorney General’s office says it will analyze the responses, compare them across platforms, and at the conclusion of this process, present its findings to the public. While compliance does not appear to be compulsory, the OAG has set a deadline of May the 1st for answers to be returned, with a warning that any platforms that decline to provide meaningfully complete responses will be publicly identified.