US Regulators: Cryptocurrency Exchanges Are Vulnerable to Market Manipulation
According to a months-long investigation by the New York State Attorney General’s office. The US regulators have warned New York residents who trade in virtual, or cryptocurrency that cryptocurrency exchanges may be vulnerable to hacking and price manipulation due to lack of basic consumer protections.
According to the report, the exchanges themselves are not doing enough to protect their customers. Major exchanges fail to guard their customers against fraud, manipulation, and abuse. Consumers and investors deserve to understand how their financial service providers operate, protect customer funds, and ensure the integrity of transactions.
The questionnaire originally went out to 13 crypto exchanges. Ten voluntarily complied with the study, but four did not respond, arguing they did not serve customers in New York.
But, after investigating three of those non-responders — Kraken, Binance, and Gate.io — the New York Attorney General’s office “referred Binance, Gate.io, and Kraken to the Department of Financial Services for potential violation of New York’s virtual currency regulations.”
Market manipulation is nothing new: spoofing and wash trading — the forms of market manipulation the probe is focusing on, have been around for years. But the attributes of cryptocurrency markets make them particularly susceptible to this type of fraud.
U.S. regulators have repeatedly voiced concern about crypto market manipulation and consumer protection. The Securities and Exchange Commission cited those issues as key reasons to block a bitcoin ETF, and the agency has launched numerous investigations into fraudulent initial coin offerings.
However, Trading platforms vary in how they have responded to these risks. Some have taken significant, concrete steps to improve the safety, reliability, and transparency of their operations. Others have not. Meanwhile, customers have had limited access to the information needed to assess the security and fundamental fairness of platforms.
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