Business 20 April 2018

Erik Gibbs

Kraken responds to New York crypto exchange crackdown

This week, New York Attorney General (AG) Eric Schneiderman announced that his office is opening an inquiry into cryptocurrency exchange operations. Several exchanges, including Gemini, Binance, bitFlyer, Bittrex and Kraken are targets of Schneiderman’s wrath, with the inquiries being focused more on the companies’ business practices and systems. Kraken’s co-founder, Jesse Powell, took to Twitter to give his take on the situation, calling the investigation “insulting.”

Powell started by saying, “Somebody has to say what everybody’s actually thinking about the NYAG’s inquiry. The placative kowtowing toward this kind of abuse sends the message that it’s ok.” He went on to point out that it is obvious that regulators are clueless when it comes to discerning what businesses want, as well as what consumers want.

Kraken wisely exited the state in 2015. Many in the cryptocurrency industry, including Powell, feel that New York is hostile to digital currency. Their estimation of the crypto atmosphere in the state has a solid foundation, as the exchanges have been presented with a 34-page demand by AG Schneiderman that has to be completed and returned within two weeks.

Everything was running relatively smoothly in New York pre-2015. However, that year, lawmakers approved a series of regulations called BitLicense, and more than 10 exchanges called it quits, removing their operations from the state. To date, only three BitLicenses have been awarded, going to Ripple, Coinbase and Circle. Other applicants have applied, but they were all rejected.

Schneiderman initiated the inquiry in conjunction with his Virtual Markets Integrity Initiative. While it may seem like a solid effort to protect consumers, it would be highly prudent to ask who will be reviewing the information submitted by the exchanges, if they choose to buckle. What experts in the fields of cryptocurrencies and finances have been sought out to analyze the data? Nothing in his résumé indicates that he has formal training in either category.

It’s a safe bet that Kraken doesn’t intend to respond to the inquiry, and others may follow suit. What ramifications will follow remain to be seen, but it’s important that business leaders stick to their guns when facing illegitimate attacks. Powell made a good suggestion in his Twitter rebuttal, stating that perhaps the markets themselves should decide what’s important to consumers.

Powell signed the tweet with a succinct, yet poignant, “Good luck, New Yorkers.”

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

Bitcoin Satoshi Vision (BSV) is today the only Bitcoin project that follows the original Satoshi Nakamoto whitepaper, and that follows the original Satoshi protocol and design. BSV is the only public blockchain that maintains the original vision for Bitcoin and will massively scale to become the world’s new money and enterprise blockchain.

COMMENT

latest news

Blockchain, Brexit, and Ireland: What will happen?

Business 7 hours ago

Blockchain, Brexit, and Ireland: What will happen?

The economic uncertainty has led many to believe that cryptocurrency might be able to play a role, since traditional currencies might not be able to stabilize through the crisis.

Read More
Cryptopia outlines eventual return as exchange resumes trading

Business 7 hours ago

Cryptopia outlines eventual return as exchange resumes trading

Co-founder Rob Dawson categorically denies that an exit scam took place, and points out that Cryptopia actually plans on reopening. For now, the crypto exchange has resumed trading on 40 various crypto trading pairs.

Read More
Galaxy Digital invests $5.25 million in Bison Trails

Business 7 hours ago

Galaxy Digital invests $5.25 million in Bison Trails

After investing his clients money at the worst possible time, Stefanos Papanastasiou is being sued for losing most of the money.

Read More