The New York State Attorney General published a new report titled “Virtual Markets Integrity Initiative” recently, in which it noted that several cryptocurrency exchanges are not interested in avoiding market manipulation and have lower standards for customer safety.
Nine exchanges, including Coinbase and Gemini, participated in the survey, which led to the report. Kraken, Gate.io, Binance, and Huobi did not participate in the survey as they did not operate in the state of New York. The report is now stirring controversy in the crypto sphere.
Kraken Fights Back Against Attorney General
In a series of tweets, Kraken dismissed the report by New York Attorney General Barbara Underwood.
To begin with, here is what the exchange wrote:
“Thanks to the NY taxpayer for funding this research — saved our Product team a lot of time, and we got some interesting non-public info on our competitors. Excellent overview of issues and a nice list of ‘Questions Customers Should Ask’ on pg 32.”
Then it went on to trash the report, writing:
“We must, however, object to the highly unprofessional/malicious implication that because we did not respond to the voluntary information request, we *might* be operating illegally. We told you we don’t operate in NY. AG trying cases in the court of public opinion now?”
It also presented its own theory about the timing of the report. Kraken wrote:
“Is it a coincidence that this was published the day before the expiration of the @CBOE futures contract? Who traded on insider information and what is being done to prevent manipulation by @NewYorkStateAG employees? Quis custodiet ipsos custodes? http://www.cboe.com/delayedquote/detailed-quotes?ticker=XBT%2fU8 …”
The tweetstorm was seen by Ethereum founder Vitalik Buterin, to which he replied and said that libertarians have always favored regulatory agencies working like rating agencies. He also noted that the report is too focused on procedure.
Coinbase Rebuffed the Claims Earlier
While Kraken was not part of the survey, Coinbase was one of the most prominent exchanges that responded to it. Coinbase too had problems with the report, saying that media coverage has misinterpreted it and suggested that the exchange engaged in “self-trading” or “proprietary trading.”
The exchange strongly condemned the media reports claiming that it does not engage in any such trading and focuses instead on making the platform easy to use and the markets more liquid.
Binance CEO Changpeng Zhao was also asked about his views on the report during a Singapore conference, but he refused to comment. Binance was not a part of the survey, and the Attorney General has referred all four nonparticipating exchanges to the Department of Financial Services for violating the crypto regulations of New York.