5 ms·

NY Attorney General Report on Crytpocurrency Market Integrity

40 points by chollida1 8y ago

AdrianSetter 8y ago
If the document changes for any reason, here is a immutable copy fetched just seconds before writing this comment. https://ipfs.io/ipfs/QmQKAuCmjwpEjGp2V5bu4C533PDY1tuuen1vpBUGhdsjRm https://ipfs.io/ipfs/QmQKAuCmjwpEjGp2V5bu4C533PDY1tuuen1vpBU...
chollida1 8y ago
The big takeaway for me was that coinbase not only trades on their own exchange but accounts for 20% of its volume. Coinbase went from being one of the "good guys" to being one of the "bad guys" really quickly here :( There is a reason that we dont' let the exchanges trade on their own markets against their clients. It's a long learned lesson. Especially because coinbase came out earlier and said expicilty that they don't do this https://www.recode.net/2018/1/22/16911692/cryptocurrency-bitcoin-trading-coinbase-revenue-secondary https://www.recode.net/2018/1/22/16911692/cryptocurrency-bit... > Coinbase makes money not on bitcoin’s price but on the volume of trades — charging both the buyer and seller usually a fee between 0.25 percent and 1 percent of the total transaction size through the site. The company serves as both an exchange and a broker of deals, though it does not serve as a market maker that holds bitcoin The NY AG has a tweet storm about this here https://twitter.com/NewYorkStateAG/status/1042098555849265152 https://twitter.com/NewYorkStateAG/status/104209855584926515... Question to the crypto currency community. Who are the good exchanges now? Where can you trade with any sort of assurance that the exchange isn't front running you or using your order flow to trade against you? I guess this is a good place to start https://twitter.com/dlauer/status/1042114043065126914 https://twitter.com/dlauer/status/1042114043065126914 Also > Circle reported that it accounted for less than one percent of the executed volume on its platform Poloniex during the most recent time period reviewed. So the exchange backed by wall street was squeaky clean, while Coinbase comes off looking pretty poorly from an ethics stand point, that's actually a shock and pretty refreshing. Though Wall street is alot more regulated and risk adverse so maybe that's not too surprising.
- Bombthecat 8y ago
  I think kraken is a good one. (maybe only good one?) there price changes feel way more natural then one other exchanges. (for the lack of other words)
  - hath995 8y ago
    The report specifically calls out Kraken as extremely suspicious. This is the excerpt. "The OAG could not review the practices and procedures of non-participating platforms (Binance, Gate.io, Huobi, and Kraken) concerning manipulative or abusive trading. However, the Kraken platform’s public response is alarming. In announcing the company’s decision not to participate in the Initiative, Kraken declared that market manipulation “doesn’t matter to most crypto traders,” even while admitting that “scams are rampant” in the industry."
- gammateam 8y ago
  I find that tweet storm problematic, she frames automated trading as a bad thing while her slide only gives information about the various policies that some crypto exchanges have about it. wouldn't the real conversation be about what she expects here? does she want an additional paragraph in the 40 page disclaimer? "There may be automated trading, users that enter trades manually may be at a disadvantage in reacting to market fluctuations."
- coolspot 8y ago
  Relevant excerpt from the report: " Trading platforms that engage in proprietary trading on their own venues uniformly told the OAG that their trading desks had no informational or other trading advantage over customers. The OAG found that significant variation exists in the amount of trading activity attributable to those platform operators. Circle reported that it accounted for less than one percent of the executed volume on its platform Poloniex during the most recent time period reviewed. BitFlyer USA indicated that its own activity accounted for approximately ten percent of the executed volume on its platform. Another, Coinbase, disclosed that almost twenty percent of executed volume on its platform was attributable to its own trading. "
- 8y ago
rossdavidh 8y ago
I will probably get downvoted for this, but: I think there is a recurring pattern here. Like discovering that absolute anonymity on the internet enabled bad behavior, and pseudonymity allowed foreign governments (or just trolls) to engage in duplicitous or offensive behavior more easily, it turns out that many of the traditional "limitations" of government-regulated currencies, are features and not bugs. I'm not saying there's no place for cryptocurrencies, but they are clearly not for the average, non-technical, mom-and-pop operation to use. They do not protect you from being abused by powerful institutions; they make you more vulnerable to being abused by powerful institutions (although perhaps different ones). If you are a technically savvy user or a large organization, there could be valid reasons for using them, but in general they are not a replacement for ordinary non-crypto currencies, and that's not in spite of their freedom from government control, but rather precisely because of it.
- askmike 8y ago
  I agree with the points you make, but not the overall sentiment of your comment: Bitcoin does provide a level of privacy and self sovereignty that hasn't really existed since cash. So i agree with your: > (although perhaps different ones) Powerful players can only play games with each other around the price. And if you are a retail trader you might get caught up in this. But that's about the only thing they can do, limiting the attack surface drastically. I'm saying see cryptocurrencies more as an expression of freedom and less as a place to dump all your savings into. Unfortunately too many people got that backwards.
- avmich 8y ago
  I think the idea here is to get a competition for the government. In other words, an ideal government does serve those purposes and and provides features not bugs; however in reality government is far from perfect and does its job rather poorly, from the point of view of many. So they propose to create a virtual one for the area of financial transactions with the hope that the new "limitations" of new "government control" will work better than what we have right now.
- kadendogthing 8y ago
  >I'm not saying there's no place for cryptocurrencies, but they are clearly not for the average, non-technical, mom-and-pop operation to use. They do not protect you from being abused by powerful institutions; they make you more vulnerable to being abused by powerful institutions (although perhaps different ones). This is why the state exists. It's better to have defined powers than create a power vacuum that gets filled by other entities with their own interests. Techno-libertarian babble be damned.
seibelj 8y ago
This is a good overview of nitty-gritty details of exchanges that wasn’t assembled before. If the purpose of the document was to scare people from trading or purchasing crypto, I think it failed. It is truly incredible that in 10 years cryptocurrencies are now worth in the $100 billion vicinity. If you read HN regularly, not only should they be worth 0 but everyone with a neutral-to-positive opinion of them belong in jail. Just like self driving cars, the HN opinion can be wrong to extremely wrong.

40 points by chollida1 8y ago

If the document changes for any reason, here is a immutable copy fetched just seconds before writing this comment. https://ipfs.io/ipfs/QmQKAuCmjwpEjGp2V5bu4C533PDY1tuuen1vpBUGhdsjRm https://ipfs.io/ipfs/QmQKAuCmjwpEjGp2V5bu4C533PDY1tuuen1vpBU...

chollida1 8y ago

The big takeaway for me was that coinbase not only trades on their own exchange but accounts for 20% of its volume. Coinbase went from being one of the "good guys" to being one of the "bad guys" really quickly here :( There is a reason that we dont' let the exchanges trade on their own markets against their clients. It's a long learned lesson. Especially because coinbase came out earlier and said expicilty that they don't do this https://www.recode.net/2018/1/22/16911692/cryptocurrency-bitcoin-trading-coinbase-revenue-secondary https://www.recode.net/2018/1/22/16911692/cryptocurrency-bit... > Coinbase makes money not on bitcoin’s price but on the volume of trades — charging both the buyer and seller usually a fee between 0.25 percent and 1 percent of the total transaction size through the site. The company serves as both an exchange and a broker of deals, though it does not serve as a market maker that holds bitcoin The NY AG has a tweet storm about this here https://twitter.com/NewYorkStateAG/status/1042098555849265152 https://twitter.com/NewYorkStateAG/status/104209855584926515... Question to the crypto currency community. Who are the good exchanges now? Where can you trade with any sort of assurance that the exchange isn't front running you or using your order flow to trade against you? I guess this is a good place to start https://twitter.com/dlauer/status/1042114043065126914 https://twitter.com/dlauer/status/1042114043065126914 Also > Circle reported that it accounted for less than one percent of the executed volume on its platform Poloniex during the most recent time period reviewed. So the exchange backed by wall street was squeaky clean, while Coinbase comes off looking pretty poorly from an ethics stand point, that's actually a shock and pretty refreshing. Though Wall street is alot more regulated and risk adverse so maybe that's not too surprising.

Bombthecat 8y ago
I think kraken is a good one. (maybe only good one?) there price changes feel way more natural then one other exchanges. (for the lack of other words)
- hath995 8y ago
  The report specifically calls out Kraken as extremely suspicious. This is the excerpt. "The OAG could not review the practices and procedures of non-participating platforms (Binance, Gate.io, Huobi, and Kraken) concerning manipulative or abusive trading. However, the Kraken platform’s public response is alarming. In announcing the company’s decision not to participate in the Initiative, Kraken declared that market manipulation “doesn’t matter to most crypto traders,” even while admitting that “scams are rampant” in the industry."
gammateam 8y ago
I find that tweet storm problematic, she frames automated trading as a bad thing while her slide only gives information about the various policies that some crypto exchanges have about it. wouldn't the real conversation be about what she expects here? does she want an additional paragraph in the 40 page disclaimer? "There may be automated trading, users that enter trades manually may be at a disadvantage in reacting to market fluctuations."
coolspot 8y ago
Relevant excerpt from the report: " Trading platforms that engage in proprietary trading on their own venues uniformly told the OAG that their trading desks had no informational or other trading advantage over customers. The OAG found that significant variation exists in the amount of trading activity attributable to those platform operators. Circle reported that it accounted for less than one percent of the executed volume on its platform Poloniex during the most recent time period reviewed. BitFlyer USA indicated that its own activity accounted for approximately ten percent of the executed volume on its platform. Another, Coinbase, disclosed that almost twenty percent of executed volume on its platform was attributable to its own trading. "
8y ago

rossdavidh 8y ago

I will probably get downvoted for this, but: I think there is a recurring pattern here. Like discovering that absolute anonymity on the internet enabled bad behavior, and pseudonymity allowed foreign governments (or just trolls) to engage in duplicitous or offensive behavior more easily, it turns out that many of the traditional "limitations" of government-regulated currencies, are features and not bugs. I'm not saying there's no place for cryptocurrencies, but they are clearly not for the average, non-technical, mom-and-pop operation to use. They do not protect you from being abused by powerful institutions; they make you more vulnerable to being abused by powerful institutions (although perhaps different ones). If you are a technically savvy user or a large organization, there could be valid reasons for using them, but in general they are not a replacement for ordinary non-crypto currencies, and that's not in spite of their freedom from government control, but rather precisely because of it.

askmike 8y ago
I agree with the points you make, but not the overall sentiment of your comment: Bitcoin does provide a level of privacy and self sovereignty that hasn't really existed since cash. So i agree with your: > (although perhaps different ones) Powerful players can only play games with each other around the price. And if you are a retail trader you might get caught up in this. But that's about the only thing they can do, limiting the attack surface drastically. I'm saying see cryptocurrencies more as an expression of freedom and less as a place to dump all your savings into. Unfortunately too many people got that backwards.
avmich 8y ago
I think the idea here is to get a competition for the government. In other words, an ideal government does serve those purposes and and provides features not bugs; however in reality government is far from perfect and does its job rather poorly, from the point of view of many. So they propose to create a virtual one for the area of financial transactions with the hope that the new "limitations" of new "government control" will work better than what we have right now.
kadendogthing 8y ago
>I'm not saying there's no place for cryptocurrencies, but they are clearly not for the average, non-technical, mom-and-pop operation to use. They do not protect you from being abused by powerful institutions; they make you more vulnerable to being abused by powerful institutions (although perhaps different ones). This is why the state exists. It's better to have defined powers than create a power vacuum that gets filled by other entities with their own interests. Techno-libertarian babble be damned.

seibelj 8y ago

This is a good overview of nitty-gritty details of exchanges that wasn’t assembled before. If the purpose of the document was to scare people from trading or purchasing crypto, I think it failed. It is truly incredible that in 10 years cryptocurrencies are now worth in the $100 billion vicinity. If you read HN regularly, not only should they be worth 0 but everyone with a neutral-to-positive opinion of them belong in jail. Just like self driving cars, the HN opinion can be wrong to extremely wrong.