State to examine cryptocurrency platforms

Sean Reid
April 19, 2018

Attorney General Schneiderman said in his statement that he is launching the Virtual Markets Integrity Initiative, which aims to improve transparency and accountability of a number of cryptocurrency trading platforms in efforts to "protect virtual currency investors".

According to a press release issued by the New York Attorney General's Office this week, initial letters were sent to over a dozen exchanges, requesting information about their business practices and systems-including whether they now use bots, or whether they have any conflicts of interest.

Schneiderman says that as cryptocurrencies, such as bitcoin, grow in popularity it's essential to ensure consumers in NY and across the nation understand more about exchanges before making an investment.

While launching the Virtual Markets Integrity initiative, Schneiderman stated that a majority of cryptocurrency investors do not have access to "basic facts" about the operation of a cryptocurrency exchange.

The scrutiny has taken a toll on cryptocurrencies, which took a dive last month after the SEC warned of "potentially unlawful trading platforms for trading digital assets".

Reports from the QG's office sent the letter to 13 exchanges and they include GDAX, Gemini, bitFlyer USA, Bitfinex, Bitstamp USA, Kraken, Bittrex, Poloniex, Binance, Tidex,, itBit Trust Company and Huobi.Pro.

Schneiderman said on Tuesday that his office reached out to 13 trading platforms, including the popular Coinbase, seeking information on their operations, internal controls, and safeguards for investors. Exec. Law ยง 63 (12); N.Y. Gen. Bus. The current law and the concept of double jeopardy in general mean that a person can not be tried for the same crime twice.

Are cryptocurrency exchanges adequately addressing fraud, preventing conflicts of interests, and stopping market manipulation? Sophisticated investors routinely require privately-owned trading venues on which they are considering trading to furnish robust disclosures about their operations, policies, and internal controls so that they can evaluate the risks of trading on a given platform. The office then plans to compile the responses and present what it's learned to the public. The trading platforms have until May 1 to complete the questionnaire.

John D. Castiglione, Asst. You can read the full text of the "Virtual Markets Integrity Initiative Questionnaire" here.

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