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Cryptocurrency exchanges probed by New York attorney general

Cryptocurrency exchanges probed by New York attorney general

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Thirteen cryptocurrency exchanges are now under the microscope of New York State Attorney General Eric Schneiderman, who has launched an inquiry into their policies and practices, according to a statement released by his office.

Schneiderman’s office sent letters to Coinbase, Bitfinex, Bitstamp, Payward, Gemini, Kraken, ifinex, Bittrex, Poloniex, Tidex,, itbit and Huobi asking the cryptocurrencies to complete a questionnaire.

The probe, dubbed the Virtual Integrity Initiative, is a fact-finding inquiry into the thirteen platforms. It has requested information on their operations, internal controls, and safeguards to protect customer assets. Overall, the initiative wants to improve transparency and accountability and to better inform investors and consumers.

“With cryptocurrency on the rise, consumers in New York and across the country have a right to transparency and accountability when they invest their money. Yet too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms,” Schneiderman said in the statement.

“Our Virtual Markets Integrity Initiative sets out to change that, promoting the accountability and transparency in the virtual currency marketplace that investors and consumers deserve.”

That Schneiderman wants more transparency and accountability comes as no surprise as scams within the cryptocurrency community is becoming more prevalent. Last week, Indian-based cryptocurrency exchange Coinsecure announced that 438.318 bitcoins, or roughly $3 million, had gone missing and it accused its chief strategy officer of being the culprit.

Additionally, South Korean prosecutors arrested Coinnest exchange CEO earlier this month for fraud and embezzlement and accused him of transferring funds out of customer accounts and into his own.

The questionnaire provided to the cryptocurrency exchanges has seven major topics with 31 questions to answer.

  • Ownership and control
  • Basic operations and fees
  • Trading policies and procedures
  • Outages and other suspensions of trading
  • Internal controls
  • Privacy and money laundering
  • Protection against risks to customer funds

An eight topic — written materials — ask the exchanges to provide copies of documents such as the platform’s current team, its policies and procedures, and initial application to the New York State Department of Financial Services.

The cryptocurrency exchanges have until May 1, 2018, to submit their responses. Once the attorney’s general office has received all the responses, it will analyze them, compare them to one another, and then release its findings to the public.

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