Three cryptocurrency exchanges may be operating illegally in New York, according to the state’s legal chief.
In a report Tuesday, Attorney General Barbara Underwood said her office referred Binance, Kraken and Gate.io to the New York Department of Financial Services for possible violation of digital-currency regulations. Each of those exchanges had earlier refused to provide information requested by the state. The exchanges didn’t immediately respond to requests for comment.
“New Yorkers deserve basic transparency and accountability when they invest—whether on the New York Stock Exchange or on a cryptocurrency platform,” Underwood said in a statement. “Many virtual currency platforms lack the necessary policies and procedures to ensure the fairness, integrity, and security of their exchanges.”
In April, the attorney general began asking 13 major crypto marketplaces for details on their operations, internal controls, and safeguards against market manipulation and fraud. Nine of the platforms participated, while the other four claimed they don’t allow trading in New York. Kraken Chief Executive Officer Jesse Powell in April dismissed the office’s request in a tweet.
The report found three “areas of concern” in the crypto markets, specifically flagging lack of protection from abusive trading practices, conflicts of interest and limited safeguarding of customer funds.
“Virtual asset trading platforms have yet to implement serious efforts to monitor and stop abusive or manipulative trading,” Underwood said. “Few platforms seriously restrict, or even monitor, the operation of ‘bots’ or automated algorithmic trading on their venue.”