CoinDesk reports that Coinbase has officially responded to New York Attorney General Eric Schneiderman ongoing inquiry on crypto exchanges.
Last month, as a part of the proposal to protect financial markets consumers, the Attorney General of New York, Eric T. Schneiderman, launched the Virtual Markets Integrity Initiative, according to which, the Attorney General’s office sent out an official letter to 13 major cryptocurrency exchange platforms. As many investors rely on these platforms, the initiative sought to bring complete transparency and accountability to consumers. It aimed to give the average investors a clear picture of the exchange platform’s operations and policies. Specifically, the inquiry seeks information about exchanges’ operations, their leadership, funding, terms of service, privacy protocols, relationships with other financial institutions and use of trading bots.
We applaud the Office of the Attorney General for taking action to bring further transparency to the virtual currency markets,
– Coinbase’s chief legal and risk officer Mike Lempres wrote in a five-page response letter.
Insights Into the Company’s Meteoric Growth
The letter by Lempres offers some notable insights into the company’s meteoric growth over the past 18 months. Of particular note, is the assets kept on Coinbase platform, which amount to $150 billion USD.
The letter also discloses the firm’s funding ($225 million to date), its financial position (“a profitable and self-sustaining business”), and its personnel levels (over 300 employees, 1,000 total when you factor in contractors). Approximately 20 percent of those employees work in the firm’s compliance division, highlighting how rocky the regulatory landscape is for companies operating in this nascent industry.
The letter describes Coinbase’s cooperation with law enforcement and regulatory agencies across the globe, its “state of the art” cybersecurity program, and its recent systems upgrades, which Lempres says enabled the platform to achieve 99.99% uptime in April.
It also says Coinbase is a federally regulated money service business and has been granted licenses by regulatory authorities in 31 states, including New York’s BitLicense. The letter notes that this controversial license involves “considerable regulatory oversight”.
The full version of the letter had been transmitted to the AG’s office through an encrypted end-to-end secure file exchange service and requested that the agency provide the data with confidential treatment.
However, Coinbase has not provided detailed financial information in the public version of its letter, but it did give some its customers a sneak peak.
The representatives of Attorney General’s office will review the responses from all the exchange platforms and compare them with other platforms. Furthermore, they will communicate certain relevant information with the public based on their assessment.
CCN reports that majority of exchanges have welcomed the New York Attorney General’s inquiry saying it will boost the public confidence and openness in the industry. However, Kraken, which does not serve New York customers, has stated unequivocally that it has no plans to comply with the OAG’s insulting request and has criticized other companies for kowtowing to regulators.
Do you support the move by the New York AG? Let us know in the comments section.