As part of an attempt to protect cryptocurrency investors and draw greater transparency into the way that cryptocurrency exchanges operate, New York Attorney General Eric Schneiderman has delivered letters into 13 virtual currency exchanges requesting they disclose crucial information about their operations.
Along with the letter, the attorney general delivered a three-page poll to Coinbase, Gemini, Bitfinex, Poloniex and nine additional trades requesting them to disclose, among other things, information like what banks they use, the way they maintain client funds, what fees they charge, the way they develop with these fees, the way they move capital around, that has access to the order books, and also the reach of third party audits.
The letter was a part of a “Virtual Markets Integrity Initiative” launched by Schneiderman to shine a light on the policies and rules of platforms utilized by consumers to trade virtual monies and original coin offering (ICO) tokens.
Tough Times Ahead
Since the price of bitcoin crossed $10,000 to the first time in November 2017, attaining a peak of over $19,700 a couple of weeks later, a rush of dealers began entering the market. However, as many have learned the hard way, putting funding includes its very own set of dangers.
In the U.S., cryptocurrency regulation has grown a difficult web to untangle for companies attempting to do business in the space. Not just do virtual exchanges and companies have to manage Financial Crimes Enforcement Network federal regulators like the Securities and Exchange Commission and the Commodity Futures Trading Commission, but they have to compete with regulators in each of the 50 states.
“Together with cryptocurrency on the rise, consumers in New York and throughout the country have the right to transparency and responsibility when they spend their cash,” the attorney general said in an announcement today, April 16, 2018. “Yet too often, consumers do not possess the basic facts they have to rate the fairness, integrity and safety of the trading platforms.”
Gemini, an exchange run by the Winklevoss twins, told Bitcoin Magazine, it “applauds” the attorney general’s initiative and looks forward to submitting its responses to the poll.
Stephen Palley, an attorney in Washington D.C., famous for his work in the crypto space, says he’s not surprised to learn of the New York attorney general’s initiative. At precisely the identical time he sees this . “That is only the beginning. There will be a major onslaught. It will close down or closed out a whole lot of trades out of the U.S.,” he told Bitcoin Magazine.
A Slew of Queries
In an tweet, Palley referred to Schneiderman as a “activist” and mentioned,”Being in his crosshairs is not a great thing.”