The Office of the New York Attorney General says crypto exchanges are vulnerable to conflicts of interest, manipulation, and other consumer risks.
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New York Attorney General Eric T. Schneiderman sent letters to thirteen crypto exchanges in April as part of the initiative. In those, the Attorney General is requesting that the exchanges provide more information on internal controls, operations, and other important issues.
The initiative was aimed at providing the average investor with a better understanding of the risks and protection.
The new report examines the practices of ten US-based as well as international crypto trading platforms. It also examines and studies the data collected by the office of the Attorney General that is pertinent to the state of cryptocurrency markets as a whole.
The study identified the absence of accepted auditing methods for virtual assets. This is responsible for the lack of a transparent and consistent approach to auditing cryptocurrency trading independently on exchanges.
Furthermore, customers’ funds are often at a high risk of loss. Their exchange accounts retaian these funds and a continual danger of attacks and theft exist.
Additionally, the report questions the issues surrounding public protection and whether commercial insurance is sufficient to cover possible losses.
Furthermore, the study delves into abusive trading practices. It states that most crypto trading platforms rely on automated traders. They offer special conditions which leaves retail customers at a disadvantage.
The report states:
“Automated trading activities could also allow a single trader or group of traders to command multiple accounts simultaneously to obscure coordinated trading, in order to manipulate prices.”
In addition, the report further reads:
“Though some virtual currency platforms have taken steps to police the fairness of their platforms and safeguard the integrity of their exchange, others have not. Platforms lack robust real-time and historical market surveillance capabilities, like those found in traditional trading venues, to identify and stop suspicious trading patterns.”
In conclusion, the report studies the present scenario surrounding the crypto exchanges and proposes ways to safeguard the interests of the community.
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