The New York Office of the Attorney General, or OAG, has recently released a report claiming that several prominent cryptocurrency exchanges are highly vulnerable to coercion and market manipulation.
The report has drawn a lot of media attention, as well as backlash from key players within the industry, most notably Coinbase. According to the OAG, Coinbase, and several other popular trading platforms have been trading for their own benefit, rather than the benefit of their customers.
Coinbase Retaliates Against The OAG’s Claims
Last Thursday, September 13th, 2018, Mike Lempres, Coinbases, chief policy officer, released a blog post refuting the OAG’s claims, saying that the report has falsely accused Coinbase of manipulating the market, leading to the defamation of the company’s name in the eyes of the media.
According to the report released by the OAG, “Coinbase disclosed that almost 20 percent of executed volume on its platform was attributable to its own trading.” Lempres responded to the allegations by stating that “When Coinbase executes these trades, it does so on behalf of Coinbase Consumer customers, not itself.”
Fun fact from the NY atty gen’l. Coinbase has a prop desk that actively trades against its clients. 20% of all trades executed on the Coinbase platform were made by their prop desk. Just burn crypto down and start over. I’m serious. https://t.co/AmCdKJWwiy
— Ben Hunt (@EpsilonTheory) September 18, 2018
The OAG’s Allegations
According to the report made by the OAG, “Coinbase disclosed that almost 20 percent of executed volume on its platform was attributable to its own trading.”
On the other hand, Lempres explained that this figure only represents the trade volume on Coinbase Consumer, and not any form of insider trading, as was claimed by the OAG’s report.
Coinbase Consumer is a service that executes orders made by its customers on through Coinbase’s exchange platform. And, according to Lempres, this is exactly where the OAG has made their mistake.
Elsewhere, other key industry players such as the founder of Kraken, Jesse Powell, and Erik Voorhees of Shapeshift, have been voicing their outrage about the OAG’s unfounded claims.
In the past, both Powell and Voorhees, have not been quiet about such defamatory allegations, and claim that the report is nothing but an abuse of the OAG’s authoritarian power. According to them, such allegations as those in the OAG’s report are one of the major problems that have been stifling the growth of the blockchain industry in New York City.
Echoing this sentiment, Powell recently released a Tweet saying: “NY is that abusive, controlling ex you broke up with 3 years ago but they keep stalking you, throwing shade on your new relationships, unable to accept that you have happily moved on and are better off without them. #getoverit,”
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