NY Attorney General refers three crypto exchanges to state regulator

September 19, 2018
Chris Wheal

New York’s Attorney General has referred three cryptocurrency exchanges to the state financial regulator for “possibly” operating unlawfully in New York.

Barbara Underwood published a lengthy report on Tuesday entitled Virtual Markets Integrity Initiative (VMII)  – the result of four months of investigation – its aim to “protect and inform New York residents who trade in virtual currency”.

Consumer protections

Barbara Underwood

Underwood’s report found that several crypto exchanges suffered from weak market surveillance, conflicts of interest and lacked adequate consumer protection.

Unlike traditional asset exchanges, virtual asset exchanges were not registered under state or federal securities or commodities laws, nor had they implemented common standards for security, internal controls, market surveillance protocols, disclosures or other investors and consumer protections, the report said.

Launched in April, the VMII asked 13 platforms to voluntarily share information about their activities. Four of the 13 refused, saying they did not offer services within New York State.

Binance, Kraken and Gate.io

The Attorney General’s office investigated this claim, and has now referred three – Binance, Kraken and Gate.io – to the New York Department of Financial Services to review Underwood’s claims.

Neither of the three exchanges were readily available for comment. However, Annie Massa, a reporter for Business, said that a few months ago, Kraken chief executive Jesse Powell had told the magazine that the NY Attorney General “doesn’t have any authority over us”.

It appears that Kraken’s compliance with regulatory issues lies more at a federal level than state. Bloomberg reported in May that the exchange was seeking to register with the Securities and Exchange Commission.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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