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Crypto Exchange Probe 'Continues' Despite New York AG's Resignation

The sudden resignation of New York Attorney General Eric Schneiderman on Monday night doesn’t appear to have impacted that office’s inquiry into more than a dozen cryptocurrency exchanges.

CoinDesk asked the Attorney General’s Office if the crypto exchange inquiry would continue in light of Schneiderman’s exit. In an email, press secretary Amy Spitalnick wrote: “Our office’s work continues.”

Last month, the New York Attorney General’s Office launched a fact-finding inquiry into 13 cryptocurrency exchanges. The exchanges were sent detailed questionnaires, which included questions about their business models, operations, funding, trading protocols, leadership and business relationships.

Schneiderman’s abrupt resignation, effective at the close of business Tuesday, came hours after the publication of an article in the New Yorker, in which four women alleged that the attorney general had “repeatedly hit them, often after drinking, frequently in bed and never with their consent.” The women, two of whom spoke on the record, were all former romantic partners of Schneiderman.

CoinDesk contacted several of these exchanges after the inquiry was first announced, the majority of which welcomed the inquiry and praised Schneiderman’s efforts to increase transparency in the industry.

Coinbase, one of the affected exchanges, published a version of its reply to the questionnaire, though the full response has not been released due to the confidential information it contains.

One exchange, however, has refused to cooperate with the AG office’s inquiry.

Jesse Powell, CEO of Kraken, told CoinDesk: “Kraken’s BitLicense-prompted exit from New York in 2015 pays another dividend today,” referring to a controversial licensure framework. Powell’s complete statement can be read here.

New York City image via Shutterstock

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Kraken CEO: Crypto Exchange Won't Answer New York AG's Inquiry

San Francisco-based cryptocurrency exchange Kraken isn’t planning to respond to the New York Attorney General’s newly-unveiled inquiry into the ecosystem.

Kraken was one of 13 exchanges that received a letter from New York Attorney General Eric Schneiderman on Tuesday as part of his new inquiry into cryptocurrency exchanges, as previously reported. While most exchanges generally welcomed the inquiry and said they would fill out the attached questionnaire, Kraken took a different tack when reached for comment.

“Kraken’s BitLicense-prompted exit from New York in 2015 pays another dividend today,” CEO Jesse Powell said via email early Wednesday morning.

Powell made it clear that Kraken does not intend to answer the questionnaire, saying:

“I realized that we made the wise decision to get the hell out of New York three years ago and that we can dodge this bullet.”

Kraken announced that it would leave the state in 2015 due to the BitLicense, New York’s cryptocurrency regulatory framework. In a blog post at the time, the exchange called the law “a creature so foul, so cruel that not even Kraken possesses the courage or strength to face its nasty, big, pointy teeth.”

Powell wrote Wednesday that Kraken is generally happy to engage with government bodies but criticized the AG’s approach, adding: “Why don’t you try extracting this information from those businesses actually operating in your state?”

A spokesperson for the Attorney General’s office, who saw Powell’s remarks, told CoinDesk via email:

“Legitimate entities generally like to demonstrate to their investors that their money will be protected. This is basic information that credible platforms should all have on hand.”

While Kraken is not alone in having left New York due to the BitLicense, some state authorities continue to praise the regulations.

“The regulatory structure that we created for virtual currency has helped our licensed companies attract greater interest from customers, investors, and potential financial services partners,” New York Department of Financial Services superintendent Maria Vullo said last week.

Yet lawmakers in the state are looking at the question of revising the framework – or doing away with it entirely. Indeed, during a roundtable discussion in February, industry stakeholders blasted the BitLicense, prompting a pledge from the state senators that hosted it to look at how it may be reworked in light of those concerns.

Image Credit: lev radin / Shutterstock.com

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.