New York Attorney General Eric Schneiderman announced today that his office has launched a new “Virtual Markets Integrity Initiative” that fits into a broader effort from his office to protect investors in virtual currencies. The AG has said that the VMII will increase transparency and accountability to virtual currency exchanges, and provide information to enforcement agencies and investors. The AG sent letters to 13 virtual currency exchanges seeking information on their operations. The information sought includes:
Tyler Winklevoss, CEO of Gemini Trust Company, which received one of the AG's letters, stated publicly that he looks forward to responding to the letter.
The AG plans to present the findings of the VMII to the public. Thus, it will be imperative for these exchanges to determine which categories of information constitute valid trade secrets or are otherwise exempt from New York’s Freedom of Information Law. The AG's letter states that respondents may request confidential treatment for such information.
The AG’s fact-finding inquiry follows on the heels of the Texas State Securities Board’s cryptocurrency report issued on April 10, 2018. The TSSB found “widespread fraud” in cryptocurrency offerings after a four-week long investigation.
Blockchain technology utilizes a distributed digital ledger to record and track information, and can be leveraged to gain transparency and certainty in transactions ranging from cryptocurrency to supply chain tracking. This blog provides information on the legal developments surrounding implementation of blockchain technology, with an initial focus on the financial services sector.