Are cryptocurrency exchanges adequately addressing fraud, preventing conflicts of interests, and stopping market manipulation? New York Attorney General Eric Schneiderman wants to know.
Schneiderman on Tuesday launched an inquiry into the policies and practices of 13 cryptocurrency exchanges, including Coinbase, Gemini, BitFinex, and Bitstamp.
"Today, we sent letters to 13 major cryptocurrency platforms requesting key information on their operations, use of bots, conflicts of interest, outages, and other key issues," Schneiderman said in a tweet.
For now, the probe appears to be more of a fact-finding mission. The attorney general's letter is actually a questionnaire that demands to know some basic facts from the exchanges, like who owns and runs them, in addition to steps they've taken to prevent abuse.
The cryptocurrency market has seen a boom this year, but it's also gained a nasty reputation for engaging in shady practices and attracting fraudsters. Schneiderman's goal is to increase transparency and hold them accountable.
"Too often, consumers don't have the basic facts they need to assess the fairness, integrity, and security of these trading platforms," he said in a statement.
The attorney general's office pointed to the reported thefts of vast sums of cryptocurrency, poorly explained trading outages, and problems investors can encounter when trying to withdraw funds from their accounts. However, the office also said that it's seeking to stamp out abuse "without stifling legitimate market activity or innovation."
Schneiderman is asking the exchanges to answer the questionnaire by May 1. The office then plans to compile the responses and present what it's learned to the public.
Bittrex responded to say it looks forward to working with Schneiderman on the shared goal of improving transparency. Other exchanges pulled into the inquiry include bitFlyer, Kraken, Bittrex, Poloniex, Binance, Tidex, Gate.io, itBit and Huobi.pro.