Jesse Powell, CEO of Kraken, doesn’t like the way the New York State cryptocurrency regulators have treated him, but he doesn’t think their research is without its merits. After calling the regulators abusive in an earlier tweet today, he followed up by tweeting that the…
Jesse Powell, CEO of Kraken, doesn’t like the way the New York State cryptocurrency regulators have treated him, but he doesn’t think their research is without its merits.
After calling the regulators abusive in an earlier tweet today, he followed up by tweeting that the agency’s research in a recently released report has saved his product team a lot of time by providing information on his competitors. He commends the report for its overview of issues and a suggested list of questions for customers to ask.
Powell also thanked New York taxpayers for funding the research. The report, “Virtual Markets Integrity Initiative,” was based on a questionnaire former New York Attorney General Eric Schneiderman sent to 13 exchanges, including Kraken, to completed by early May.
In tweeting about the report on Sept. 18, the New York AG said they found the cryptocurrency platforms vary significantly in their operations, their safeguards to protect consumer assets and their internal controls. The AG further observed many platforms do not have the necessary policies to ensure integrity, security and fairness, and many have not deployed efforts to stop abusive trading. The tweet also said few platforms monitor bots and automated algorithmic trading on their venues.
In response to the AG tweet, one tweeter asked when they plan to investigate the forex, oil or metals markets.
Besides warning readers about the shortcomings of exchanges in general, the report contains numerous highlighted notes warning people about doing business with exchanges that did not participate in the study, especially Kraken.
One such note said that while the OAG could not review the practices of non-participating platforms including Huobi, Gate.io, Binance and Kraken, it called the Kraken’s platform’s public response alarming because it said market manipulation “doesn’t matter to most crypto traders” while acknowledging “scams are rampant” in the industry.
Another highlighted note said customers of non-participating platforms should consider the fact that these platforms could have gotten compensated for listing virtual currencies on their platforms, and evaluate if this should impact whether or not they should trade on those platforms.
Kraken tweeted that it took exception to the implication that because the company did not respond to the request that the company could be operating illegally.
Kraken also pointed out that the report was published the day before the CBOE futures contract expired, and wondered what actions were being taken to prevent manipulation by the AG.
While Kraken was among the cryptocurrency companies that left New York after the state adopted its “BitLicense” regulatory framework in 2015, the AG report nevertheless alleged Kraken could be serving the New York market illegally.
Kraken further noted that the New York Department of Financial Security knows the exchange left the state in 2015 and has no clients in the state and is therefore not under the department’s jurisdiction.
Kraken was not the only exchange not active in New York to receive the OAG questionnaire, but Powell was unusual in his willingness to protest it. He even criticized other exchanges that responded for “kowtowing” to the regulators’ demands.
Featured image from Youtube/Kraken.
Last modified: January 24, 2020 11:00 PM UTC