A number of major crypto exchanges, Binance, Kraken, and Gate.io under suspicion of potential infringement of the law, as claimed in a published report by the New York Attorney General’s office.
A state Virtual Markets Integrity Initiative was launched this April, requesting that 13 exchanges, including Bitfinex, Bittrex, Coinbase, and Gemini, disclose information about operations, such as safety measures and internal control, in order to analyze and compare them for the benefit of the people dealing with digital assets. However, even in the name of transparency and clarity, 4 prominent exchanges - Binance, Kraken, Huobi, and Gate.io - insisted not permitting trade form New York, and hence refusing to participate in the initiative.
The refusal to comply with the request raised eyebrows and alarmed the office, and the matter whether these 4 exchanges didn’t indeed function in New York was looked into. In line with this investigation, Binance, Kraken, and Gate.io have been redirected to the New York Department of Financial Services (NYDFS) for the possible abuse of the state’s crypto regulations.
Three general points of concern have been outlined in the report.
- The first being the fact that a number of exchanges lack measures intended to monitor and end abusive trading practices.
- The second problem that was described is the “serious conflicts of interest” present in the exchanges, such as trading from their own accounts on their own platforms, charging a fee to list tokens, and creating their own crypto.
- The last, but by no means the least, the problem of user fund safety is a very limited one at the moment.
The concluding questions in the report were shared by the Attorney General in a Tweet.
I encourage anyone who is considering trading cryptocurrency to read our report—and to ask these questions of all platforms: pic.twitter.com/DtVYrVQCep
— NY AG Underwood (@NewYorkStateAG) September 18, 2018
WHY IS THIS IMPORTANT?
- Binance and Kraken are major crypto exchanges that now are being scrutinized by a U.S. state department.
- The report is not all negative about the exchanges, and it can be derived from the results that some exchanges are doing better than others, one such exchange being the Winklevoss brothers Gemini.