New York AG releases report on cryptocurrency platforms' loopholes


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New York AG releases report on cryptocurrency platforms' loopholes

Transactions which involve the use of cryptocurrency have become commonplace these days. However, how safe are these platforms which enable such transactions? According to an exhaustive report published by the Attorney General of New York, on Tuesday, these are not too safe.

The report stated that the consumers could lose out because of manipulation of the market in the absence of security methods which are otherwise available if they were to use the conventional financial methods of transaction.

The report also highlighted the finding of the Virtual Markets Integrity Drive which was launched by the Attorney General's office in April 2018 and in which 13 companies which serve as platforms to enable cryptocurrency transactions were asked to provide details about their functioning.

Of these 13, four companies – Kraken, Binance, Gate.io and Huobi – declined to share information regarding their working. As such, the Attorney General has asked for a review from the New York's Department of Financial Services to ascertain if three of these companies – Binance, Kraken and Gate.io – have been functioning illegally.

"Customers should be aware that the platforms that refused to participate in the OAG’s Initiative – Binance, Gate.io, Huobi, and Kraken – may not disclose all order types offered to certain traders, some of which could preference those traders at the expense of others, and that the trading performance of other customers on those venues could be negatively affected as a result," the report clarified.

In addition, the report also emphasised, "Platforms lack robust real-time and historical market surveillance capabilities, like those found in traditional trading venues, to identify and stop suspicious trading pattern."

But, the report also went on to state that the eventual decision and discretion of using such platforms rested on a consumer. "Whether and where customers should trade virtual currencies depends upon the needs and experience of the individual customer.

As a general matter, though, customers would do well to avoid platforms that cannot satisfactorily answer the questions posed in this report."