The cryptocurrency market has been barred with a lot of turbulences with emergence as well as existence of get rich quick—schemes not taking many by surprise. However, the crypto market has been put through a unique test currently with the development of proprietary trading taking root.
During a cryptocurrency trade, investors are mostly if not wholly interested in the currency they are trading in and their trends thereof as opposed to the persons with whom they are trading with. Given the geographical restrictions of the crypto market, the location of a co-trader is not deemed significant and as such you might be as well trading with someone from the immediate neighborhood or a total stranger from the other side of the world with absolutely no clue. The greatest limitation ton this type of trade however is that, there are very high odds that, more often than not, you have traded with employees of the very exchange you are trading on.
In proprietary trade, employees trade on behalf of the company instead of just matching buyers with sellers therefore giving the company undue advantage over its customers
The OAG report
According to a report published on September 18th , 2018 by the office of the New York State Attorney dubbed “ Virtual Markets Integrity Initiative Report,” the Office of the Attorney General sent out a letter containing 34- point comprehensive questionnaires to 13 crypto exchange firms seeking to establish the nature of their policies as well as internal operations.
Despite the fact that a few firms, especially Kraken completely refuted to comply with the enquiry a majority of the exchanges participated and of those, half admitted of proprietary trading within their platforms.
While commenting on the letter, Jeff Powell, the CEO of Kraken rubbished the questionnaires stating they showed “entitlement” and “disrespect” by the OAG’s side while applauding his firm’s prior decision to exit New York. In the report, the OAG raised concerns over the lack of a proper regulatory and supervisory framework in the crypto exchange ecosystem with particular emphasis on Kraken for its shocking response on the letter which raised eyebrows.
In that response, Kraken attempts to justify its engagement in proprietary trade. A part of the excerpt from the OAG report read “the OAG could not review the practices and procedures of non-practicing platforms concerning manipulative or abusive trading. However, Kraken’s platform public response is alarming…Kraken declared that market manipulation “does not matter to most crypto traders,” even while admitting that “scams are rampant in the industry.”
Author: Author : Sam
Sam, has been contributing to cryptonewsbytes team since 2017. He is also a crypto-enthusiast and talented market analyst. In his free time, you will find him traveling and exploring new places.
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