Slashdot Mirror
New York's Attorney General Is Investigating Bitcoin Exchanges (theverge.com)
The office of New York Attorney General Eric Schneiderman announced today that it has launched an investigation into bitcoin exchanges. He's reportedly looking into thirteen major exchanges, including Coinbase, Gemini Trust, and Bitfinex, requesting information on their operations and what measures they have in place to protect consumers. The Verge reports: "Too often, consumers don't have the basic facts they need to assess the fairness, integrity, and security of these trading platforms," Schneiderman said in a statement. His office sent detailed questionnaires to the thirteen exchanges, asking them to disclose who owns and controls them, and how their basic operation and transaction fees work. The questionnaire also asks for specific details on how exchanges might suspend trading or delay orders, indicating Schneiderman is particularly concerned with exchanges manipulating the timing of public orders. The investigation will attempt to shed more transparency on how platforms combat market manipulation attempts and suspicious trading, as well as bots, theft, and fraud. Many of the exchanges Schneiderman is targeting, such as Beijing-based Huobi, have headquarters located outside the U.S., but the attorney general has jurisdiction over any foreign business operating in New York. Coin Center's director of research Peter Van Valkenburgh tells The Verge that the new investigation might be overkill, given the existing rules already in place for bitcoin exchanges. "Far from being unregulated," he says, "these businesses must contend with state money transmission licensing laws, federal anti-money laundering law, CFTC scrutiny for commodities spot market manipulation, SEC scrutiny for securities trading (should any tokens traded be securities), and in this case, state consumer protection investigations from the several attorneys general."
"Far from being unregulated,"
That they are. They aren't required to maintain an orderly market (fill orders at best available price at that time). They're not required to post a bid/ask that they can't front run and they can buy and sell from their own account when there's better pricing available.
This allows them to manipulate the spread that a listed or transparent market automatically corrects.
The main issue is front running and not being required to maintain an orderly market. Spot sellers need to provide their own lubricant.
09 F9 11 02 9D 74 E3 5B - D8 41 56 C5 63 56 88 C0 45 5F E1 04 22 CA 29 C4 93 3F 95 05 2B 79 2A B2
Back on April 11th, Vice News put up a really interesting documentary titled, "Street Gangs on the Dark Web". In the video, a reporter interviews a former drug dealer who has been using Bitcoin and the Dark Web to buy blank credit cards, reprogram them using stolen credit card data on the Dark Web, use the cards to get cash and goods, then use some of the gains to buy Bitcoin anonymously at these exchanges to continue funding his enterprise. And they also shared that a large majority of these walk-up Bitcoin exchanges are in the state of New York.
I suspect the attorney general watched the documentary as well. Because the video has mysteriously been taken down, with no mention found ask to why, and a Google search for "Vice News Street Gangs on the Dark Web" proves the video at one point did exist, but none of the links contain the video any longer. Mod points to anyone who can find a working copy of the video.