The fledgling cryptocurrency trading market is vulnerable to market manipulation and failing to provide basic consumer protections, according to a new report released on Tuesday by the New York Attorney General office.
The report calls into questions a set of practices undertaken by crypto exchanges, noting that a number of them failed to implement serious efforts to monitor and stop manipulative trading. Some crypto exchanges also engage in overlapping lines of business that present serious conflicts of interest, the report said.
“New Yorkers deserve basic transparency and accountability when they invest — whether on the New York Stock Exchange or on a cryptocurrency platform,” New York Attorney General Barbara Underwood said in the statement. “Yet, as our report details, many virtual currency platforms lack the necessary policies and procedures to ensure the fairness, integrity, and security of their exchanges.”
The NY AG started a fact-finding inquiry in April, asking for voluntary information disclosure from 13 major digital currency trading platforms, including Bitfinex, Bitstamp, Coinbase, and Gemini Trust. Four of them refused to respond, claiming that they didn’t allow trades within New York State.
The Attorney General then referred three platforms — Binance, Gate.io and Kraken — to the New York Department of Financial Services for possible illicit operation within New York.
US regulators are stepping up their oversight of the crypto industry. Wall Street regulators issued a string of actions last week against companies that have been involved with cryptocurrencies, in the first major attempts to regulate the burgeoning industry.