Crypto Exchanges Are At Risk Of Manipulation: NY Attorney General Report

The New York Attorney General office has recently published a new report, particularly aiming it towards the latest crypto news in which crypto exchanges are in the spotlight. According to the report, the exchanges are vulnerable to manipulation, conflicts of interest as well as other consumer risks.

Aside from this, the report comes as an addition to the “Virtual Markets Integrity Initiative” which was launched in April when the New York Attorney General Eric T. Schneiderman sent letters to thirteen crypto exchanges and requested information on their operations, internal controls and other key issues.

However, the recent report examines the practices of cryptocurrency exchanges – specifically ten of them based in the US and abroad. It also shows data collected by the Attorney General’s office about the state of digital currency markets as a whole.

The study also found that right now, the absence of accepted methods for auditing the virtual assets results in a lack of consistent and transparent approach to independently auditing the digital currency traded on exchanges.

As it 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.”

With this, the report also touches the point that several of the investigated platforms trade their own account in volumes that make up a significant portion of the total trading. It further reads:

“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.”