New York Attorney General: Crypto Exchanges Subject to Market Manipulation


#1

In a recent statement, New York Attorney General claimed that crypto exchanges are unsafe for business, as they are at risk of market manipulation. The report came as an attempt of US regulators to increase crypto market oversight.

Crypto Exchanges Remain Unsafe?

Making a crypto investment is a risky business as it is. The market remains highly volatile, while the number of scams and hacks is constantly on the rise. Now, according to a new report from the New York Attorney General’s office, even the exchanges themselves might put investors at risk.

The reasons for concern are many in the crypto world, but the would-be investors were at least capable of trusting in exchanges to keep them and their money safe. Now, it turns out that that might have been a mistake. The new report claims that the crypto market is vulnerable to manipulation and that its users don’t even have basic protection provided.

After a detailed look at up to 13 exchanges operating in New York, the office of NY AG attempted to determine how well-protected are the customers of these exchanges. The results were not that good according to reports. The report claims that exchanges have failed to register under federal or state securities or commodities laws. Additionally, they also failed to implement common security standards, market surveillance protocols, internal controls, or other types of protection of their customers.

Obviously, this puts the exchanges’ customers at serious risks, which are pretty varied.

Investors at Risk of Not Having Buyers for Their Coins

The in-depth look into these exchanges started back in April of this year when the NY AG asked the 13 exchanges to provide information. Four of the 13 exchanges refused voluntary information disclosure under claims that they don’t allow trading in the State of New York. Those include Gate.io, Binance Limited, Kraken, and Huobi Global Limited.

The NY AG office ended up referring three of these four platforms — Binance, Kraken, and Gate.io — to the State Department of Financial Services in New York, under suspicion of unlawful operations within the state.

This report mentions different possibilities, like insider trading and potential market manipulation. Numerous companies running the exchanges often buy and sell cryptos at their own exchange. This might be seen as a way of maintaining liquidity, but it can also pose a problem for the market. The report explains this by saying that a large volume percentage in one or multiple assets at the same source might damage the customers.

In the end, the customers are at risk of the liquidity of these assets suddenly changing. This is especially risky if the liquidity changes when it is needed most, like during large price shifts. Basically, the investors are at risk that they won’t have buyers in case they decide to sell their assets.

This was admitted by Coinbase, which is among the best-regulated exchanges in the US. Kraken, on the other hand, refused to admit the very idea of scams and market manipulation, or their importance in the crypto trading industry. All in all, it would seem that a lot of exchanges are indeed vulnerable to price manipulation on a large scale. This may be done through bots or by other methods, but the fact remains that the investors are unprotected, and their funds remain in danger.

source: https://www.newsbtc.com/2018/09/19/new-york-attorney-general-crypto-exchanges-subject-to-market-manipulation/


#2

The fact is like that, this is a great sector with great risk. Only the crypto business in question, every second you can get rich and 1 second also a mental hospital waiting.


#3

This is something which every investor and trader in crypto market knows and understands well. We are here because we think that the postives outweigh the negatives and also the risks.

Exchanges are not safe and we know it perfectly. You might have seen that dsy before yesterday, Cryptohub exchange was hacked, many coins were taken and 19.5 million of hydro tokens were stolen. This amount can easily manipulate the price of hydro at any given day.

Similarly there are whales who have thousands of bitcoin and other big coins and they can manipulate the whole market if they want anf we experience the effect every now and then.

There is no denying that all exchanges are at a great riskbut that can be mitigated slowly by accepting crypto and regulating them slowly, day by day imo.


#4

This report mentions different possibilities, like insider trading and potential market manipulation. Numerous companies running the exchanges often buy and sell cryptos at their own exchange. This might be seen as a way of maintaining liquidity, but it can also pose a problem for the market. The report explains this by saying that a large volume percentage in one or multiple assets at the same source might damage the customers.

In the end, the customers are at risk of the liquidity of these assets suddenly changing. This is especially risky if the liquidity changes when it is needed most, like during large price shifts. Basically, the investors are at risk that they won’t have buyers in case they decide to sell their assets.

This was admitted by Coinbase, which is among the best-regulated exchanges in the US. Kraken, on the other hand, refused to admit the very idea of scams and

Market manipulation or their importance in the crypto trading industry. All in all, it would seem that a lot of exchanges are indeed vulnerable to price manipulation on a large scale. This may be done through bots or by other methods, but the fact remains that the investors are unprotected, and their funds remain in danger.


#5

The big risk in the crypto market is due to the lack of proper regulation, but at the same time it is a great opportunity to get instantly huge revenue.


#6

Decentralizatiom has many huge benefits but it also presents us with the difficulty to regulate it. Blockchain’s biggest quality is becoming a threat when it comes to safety of funds in crypto. Regulations may or may not happen even in next few years, so market will remain risky.

Risk is directly proportional to reward too. You have to choose whether you are willing to take this risk or not.


#7

Yeah. Huge risk is involved in dealing with cryptocurrency. We have seen how volatile every token/coin can move not to mention those whales or group of investors who are commonly doing the pump and dump schemes. Well the funny thing about the lack of proper regulation is, they still cannot establish an appropriate framework because they are still unsure on how to control and treat cryptocurrencies and blockchain tech and still weighing things out and unsure where they really stand. Some, maybe are lurking if this revolution is for real or just a trap. They still cannot assess if its benefits will outweigh the risks involved. Remember, they do not want to risk their economic standing too and the people dependent on them.


#8

Yes, this is another factor, hacking. Stolen coins/tokens can jeopardize the value of that token plus the image and reputation of such exchange. I remember one token which was greatly affected by this kind of scheme too. It was solid project with stable value until one of the exchanges for which it was traded was hacked. All of a sudden, the token’s price was greatly reduced. Plus the fact that, fake news that make it appear, that it’s the token’s fault when in fact it was the exchange’s fault due to lack of security making it more vulnerable to hacking. Up until now it is still on the recovering phase but the good thing is, the team is so proactive that the wallet used to store the tokens was tracked and all trading activities were frozen while investigating. In the end, the wallet address was marked and every transaction from the wallet is monitored including the exchanges. Another big addition to these factors is, P&D groups. Well there are a lot of them. We can see them active on TG groups.