On Sept. 18, 2018, the New York Attorney General's Office released its Virtual Markets Integrity Initiative Report. The report addressed 10 major virtual currency trading platforms. Key takeaways include the following:
- Many of the trading platforms that participated in the report lack safeguards to effectively prevent conflicts between customer and insider interests. Items of particular concern include employee trading practices and the manner in which platform operators trade on their own venues.
- Only a minority of platforms have formal market manipulation policies and restrict, let alone monitor, automated algorithmic trading. There is no mechanism for analyzing suspicious trading strategies across platforms.
- Consumer funds are at risk because of data security vulnerabilities and an absence of industry standards for insurance and auditing virtual assets.
- The report concludes with a list of questions customers should ask before participating on virtual currency trading platforms.
Three platforms declined to participate in the report, claiming that they did not operate in New York. However, the Attorney General found otherwise and referred those entities to the New York State Department of Financial Services.
For more information on the report, please see the following:
- NY AG Report: Virtual Markets Integrity Initiative
- Three Crypto Exchanges May Be Operating Illegally, N.Y. Says
- CME's Crypto Partners Get Called Out by New York Regulators
- New York AG Report Faults Crypto Exchanges for Manipulation Risks
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.