Crypto Exchange Investigation: “Fact Finding” or Witch Hunt? 🤔

New York’s attorney general is asking 13 cryptocurrency exchanges for information about their operations in what the office is calling a fact-finding inquiry.

“As part of a broader effort to protect cryptocurrency investors and consumers, the Attorney General’s office sent letters to thirteen major virtual currency trading platforms requesting key information on their operations, internal controls, and safeguards to protect customer asset,” according to a statement released by Attorney General Eric T. Schneiderman’s office.

The news out of New York comes amid an intensifying global regulatory environment for digital currencies. In the U.S., the Securities and Exchange Commission (SEC) has taken a hard line on initial coin offerings (ICOs), the use of the term “blockchain” in company and fund names and has yet to approve a bitcoin-related exchange traded fund (ETF).

On a global level, Canadian banks are banning or limiting digital currency transactions while Chile recently unveiled a crackdown on crypto exchanges. Earlier this month, the Reserve Bank of India (RBI) said it is banning that country’s banks from dealing in digital currencies.

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Schneiderman’s inquiry includes some well-known crypto exchanges.

“The letter, sent to platforms including Coinbase Inc., Gemini Trust Co. and BitFlyer USA Inc., comes as regulators around the world are increasingly scrutinizing cryptocurrencies,” reports Bloomberg. 

Gemini was founded by Cameron and Tyler Winklevoss and is one of the largest crypto exchanges in the U.S. Currently, Gemini clients can trade the following pairs: BTC/USD, ETH/USD, and ETH/BTC. Schneiderman’s office highlights the need for increased transparency and accountability among digital currency exchanges.

“As the letters explain, the Initiative seeks to increase transparency and accountability as it relates to the platforms retail investors rely on to trade virtual currency, and better inform enforcement agencies, investors, and consumers,” according to the statement.

The New York attorney general is seeking information from the exchanges on a variety of issues, including ownership and control, fees and operations, trading policies and procedures, internal controls, confidentiality and money laundering, among others.