New York Attorney General publishes report on crypto
Crypto exchanges are vulnerable to manipulation and most aren't doing enough to protect users, according to a 32-page "Virtual Markets Integrity Report" published today.
The report is more of a warning to consumers than a threat to take action but it's certainly an area that government officials are watching closely.
"The industry has yet to implement serious market surveillance capacities, akin to those of traditional trading venues, to detect and punish suspicious trading activity," the report said.
They singled out Kraken, Binance and Gate.io , who didn't participate in answering voluntary questions and don't have required NY licenses yet continue to provide services to New York residents.
"In announcing the company's decision not to participate in the Initiative, Kraken declared that market manipulation 'doesn't matter to most crypto traders,' even while admitting that 'scams are rampant' in the industry," the report said.
On the other hand, they highlighted Gemini's efforts to partner with Nasdaq to use sophisticated market surveillance tools.
The report concludes with 10 questions users should ask before using an exchange:
1. What security measures are in place to stop hackers from unlawfully accessing the platform or particular customer accounts?
2. What insurance or other policies are in place to make customers whole in event of a theft of virtual or fiat currency?
3. What guardrails or other policies does the platform maintain to ensure fairness for retail investors in trading against professionals?
4. What controls does the platform maintain to keep unauthorized or abusive traders off the venue?
5. What policies are in place to prevent the company and its employees from exploiting non-public information to benefit themselves at the expense of customers?
6. How does the platform notify customers of a site outage or suspension, the terms under which trading will resume, and how customers can access funds during an outage?
7. What steps does the platform take to promote transparency and to subject its security, its virtual and fiat accounts, and its controls to independent auditing or verification?
8. Is the platform subject to, and registered under, banking regulations or a similar regime - for instance, the New York BitLicense regulations?