On September 18, 2018, the NY Attorney General’s office (“OAG”) published its Virtual Markets Integrity Initiative report (the “Report”) (found here). The Report includes findings from the OAG’s April 2018 fact-finding inquiry (the “Initiative”) into the policies and practices of various virtual asset trading platforms. The Report is anything but positive.
The Report expresses a number of concerns with the following key findings:
- many exchanges conduct business lines and operational roles creating potential conflicts of interest;
- trading platforms have yet to implement serious efforts to impede abusive trading activity; and
- protections for customer funds are often limited or illusory.
The Report identifies by name certain platforms that declined to participate in the April 2018 survey on the claim that they do not allow trading from New York. The Report acknowledges that the OAG has referred three of these platforms (Binance, Gate.io and Kraken) to the Department of Financial Services for potential violation of NY’s virtual currency regulations.