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Crypto Exchanges Binance, Gemini and Coinbase Targeted in NY Attorney General Inquiry

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Crypto Exchanges Binance, Gemini and Coinbase Targeted in NY Attorney General Inquiry

New York Attorney General Eric Schneiderman launched an “inquiry” into cryptocurrency exchanges and platforms in a bid to promote more transparency and accountability in the budding cryptocurrency industry.

On April 17, 2018, the NY Attorney General’s Office sent letters to 13 major cryptocurrency exchanges requesting detailed information on their operations, internal controls, conflicts of interests, and safeguards to protect customer assets. The completed questionnaires are due back by May 1.

“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,” New York Attorney General Schneiderman said in a statement.

“Yet too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms. Our Virtual Markets Integrity Initiative sets out to change that, promoting the accountability and transparency in the virtual currency marketplace that investors and consumers deserve.”

New York Attorney General Eric Schneiderman is investigating crypto exchanges. (screenshot)

Among the firms that received letters were Gemini (the digital asset exchange and custodian owned by the Winklevoss twins, Cameron and Tyler), Binance (which was founded by crypto billionaire Changpeng Zhao), and Coinbase subsidiary GDAX.

Here’s the complete list:

  1. Coinbase Inc. (GDAX),
  2. Gemini Trust Company,
  3. BitFlyer USA Inc.,
  4. iFinex Inc. (Bitfinex),
  5. Bitstamp USA,
  6. Payward Inc. (Kraken),
  7. Bittrex Inc.,
  8. Circle Internet Financial Limited (Poloniex LLC),
  9. Binance Limited,
  10. Elite Way Developments LLP (Tidex.com),
  11. Gate Technology Incorporated (Gate.io),
  12. itBit Trust Company,
  13. Huobi Global Limited (Huobi.Pro).
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Concern Over Hacks And Market Manipulation

The Attorney General’s Office said it launched the “fact-finding inquiry” to help investors and enforcement agencies understand the risks and practices on these platforms in light of bombshell hacks that resulted in hundreds of millions of dollars in cybertheft. Several recent examples include the $500 million Coincheck hack and the attempted hack on Binance.

“[This information] is critical, given reports of the theft of vast sums of virtual currency from customer accounts, sudden and poorly explained trading outages, possible market manipulation, and difficulties when withdrawing funds from accounts,” the AG’s Office said. “Often, the platforms lack the basic market protections of traditional investing platforms.”

The New York Attorney General’s Office acknowledged the mushrooming public interest in bitcoin and other cryptocurrencies, and cautioned that such investments remain “highly speculative” because the markets are decentralized and largely unregulated.

Bitcoin, ether, and other virtual currencies have captured the imagination of millions of people worldwide,” AG Schneiderman said. “Virtual currencies are inspiring innovators, entrepreneurs, and investors — and are fueling an increasingly diverse ecosystem of companies and applications. But virtual currency is also a highly speculative sector, featuring significant volatility, instability, and risk. Moreover, published reports indicate the sector has attracted fraudsters, market manipulators, and thieves.”

Ripple: Please Regulate Crypto Market

The New York AG’s inquiry comes shortly after Ripple — the blockchain-based payment network — urged British regulators to follow Japan’s lead by implementing regulations to crack down on cryptocurrency fraud, as BTCManager has reported.

“We’re at that time now where we need more clarity and rules, and we need more certainty,” said Ryan Zagone, Ripple’s head of regulatory relations. “It’s a good time to start revisiting that ‘wait and see’ approach taken by regulators.”

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