New York Attorney General Reports that Crypto Exchanges are Ripe for Manipulation
New York Attorney General’s office published a new report , which states that cryptocurrency exchanges are vulnerable to manipulation, conflicts of interest, and other consumer risks. The report represents the results of the “Virtual Markets Integrity Initiative” launched in Apriд by New York Attorney General Eric T. Schneiderman.
The study found that the absence of accepted methods for auditing virtual assets results in the lack of a consistent and transparent approach to independently auditing digital currency traded on exchanges. This puts customers’ funds held on their exchange accounts at risk of attacks from hackers or theft. The report subsequently questions the issue of public protection and the sufficiency of the commercial insurance to cover possible losses. The report explains:
“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.”
The report stated, that several of the investigated platforms trade their own account in volumes which make up a significant portion of total trading:
“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.”
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