AG Schneiderman sent letters to 13 exchanges including Coinbase and Bitfinex asking for information on their operations.
New York Attorney General Eric Schneiderman has launched an inquiry into the activities of 13 major cryptocurrency exchanges including Bitfinex, Binance, and industry leader Coinbase.
The inquiry kicked off the Office of the Attorney General’s Virtual Markets Integrity Initiative, which a Tuesday announcement described as "a fact-finding inquiry into the policies and practices" of cryptocurrency exchanges. Attorney General Schneiderman has already sent letters to 13 exchanges asking for a wide-ranging selection of information including exchange ownership and policies around trading suspensions and money laundering.
Cryptocurrency exchanges are online markets where people buy and sell cryptocurrencies and digital tokens with each other. Market activity largely decides the price of a listed virtual currency, not unlike a stock. Controversy has dogged even the most popular exchanges.
On December 22 of 2017, during a drop in the value of cryptocurrencies (which occurs when sell orders on exchanges push the price down), Coinbase suspended trading, potentially opening the door for lawsuits from irked traders. Bitfinex, for its part, has been subject to widespread speculation regarding its solvency and activity related to Tether, an embattled cryptocurrency allegedly backed by cash reserves. And in March, hackers allegedly accessed user accounts on Binance to execute trades that pumped the value of an obscure digital currency.
Coinbase and Bitfinex did not immediately respond to Motherboard’s request for comment.
By getting information about how exchanges operate out into the open, the Office of the Attorney General “seeks to increase transparency and accountability in the virtual currency marketplace—and better inform the actions of enforcement agencies, investors, and consumers in this space.”
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