{"id":21383,"date":"2018-09-20T15:10:46","date_gmt":"2018-09-20T15:10:46","guid":{"rendered":"http:\/\/ci027cfe6650032697"},"modified":"2018-09-20T15:10:46","modified_gmt":"2018-09-20T15:10:46","slug":"someones-got-be-voice-reason-kraken-responds-ny-ag-report","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/business\/someones-got-be-voice-reason-kraken-responds-ny-ag-report","title":{"rendered":"\u201cSomeone\u2019s Got to Be the Voice of Reason\u201d \u2014 Kraken Responds to NY AG Report"},"content":{"rendered":"
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The New York Attorney General\u2019s office has pointed a finger<\/a> at cryptocurrency exchange Kraken for \u201cpotential\u201d violation of state regulations. Now, the San Francisco\u2013based exchange is firing back, saying it does not appreciate what it sees as implications of illegality.<\/p>\n

\u201cSomeone has to be the voice of reason,\u201d Jesse Powell, Kraken\u2019s outspoken co-founder and CEO, told Bitcoin Magazine<\/em>. \u201cIf we all accept corrupt practices as the norm, without saying anything out of fear of unlawful retaliation, what the hell are we doing this for?\u201d <\/p>\n

In April 2018, as part of its Virtual Markets Integrity Initiative, the New York Attorney General\u2019s office sent out a voluntary questionnaire<\/a> to 13 exchanges as part of a \u201cfact-finding inquiry.\u201d Kraken and three other exchanges chose not to respond. <\/p>\n

\u201cIf you want to talk to us, ask us for a phone call, fly yourself out to San Francisco, invite us for lunch at your office,\u201d Powell said<\/a>. <\/p>\n

Fast-forward five months and the New York Attorney General\u2019s office has now issued its report<\/a> on the results of the questionnaire. Within the report is a paragraph stating that the office has \u201creferred Binance, Gate.io, and Kraken to the Department of Financial Services for potential violation of New York\u2019s virtual currency regulations.\u201d The implication was that Kraken could still be allowing New York residents to trade on its platform without a proper license. <\/p>\n

Three years ago, New York instituted a requirement<\/a> that any company dealing with cryptocurrency in the state must have a BitLicense. Rather than apply for one, Kraken, based in New York at the time, hit the road, calling<\/a> the law \u201ca creature so foul, so cruel that not even Kraken possesses the courage or strength to face its nasty, big, pointy teeth.\u201d<\/p>\n

Now, safely tucked 3,000 miles away in the Bay State, Kraken still feels haunted by the Big Apple. <\/p>\n

\n

NY is that abusive, controlling ex you broke up with 3 years ago but they keep stalking you, throwing shade on your new relationships, unable to accept that you have happily moved on and are better off without them. #getoverit<\/a>https:\/\/t.co\/DC5S1WyRnp<\/a><\/p>\n

\u2014 Jesse Powell (@jespow) September 19, 2018<\/a><\/p>\n<\/blockquote>\n

After reading the New York Attorney General\u2019s entire 42-page report, Powell asserts that there isn\u2019t \u201cany mention of evidence that we are still doing business with NY residents.\u201d (In fact, the report mentions Kraken only twice, both times on page 2.) Instead, it appears that the New York Attorney General is tossing the matter over the wall to the New York State Department of Financial Services (NYDFS) to see if they can come up with anything.<\/p>\n

Powell doubts they will. \u201cWe recently spoke to NYDFS; they are aware we are not serving New York,\u201d he said. <\/p>\n

Kraken uses a five-tiered system<\/a> to identify clients. Tier 0, verified by email only, lets clients enter the site and poke around. If clients want to trade cryptocurrency, per Tier 1 requirements, they have to supply \u201cfull name, date of birth, country and phone number.\u201d <\/p>\n

At Tier 1, the exchange \u201cdoes not collect identity documents,\u201d Powell says, but it does do other checks, like look up a person\u2019s IP address to deduce their location and verify phone and address. \u201cIf any of our checks fail or our info indicates that the user is in a prohibited geo, they are required to provide identity documents and undergo enhanced scrutiny,\u201d he said. <\/p>\n

Powell thinks the Attorney General\u2019s report was good in that it highlighted important questions consumers should be asking exchanges. However, he thinks calling out the exchanges who chose not to respond to the questionnaire unnecessary. <\/p>\n

\u201cAfter all,\u201d he said, \u201cthere are hundreds more exchanges which were never asked and are not named.\u201d<\/p>\n

Regulatory clarity in the U.S. is important to the growth of the cryptocurrency industry \u2014 as long as that regulation is reasonable, he said. \u201cWe operate in a global market and regulators must be careful not to stifle domestic business while giving foreign businesses a competitive advantage.\u201d<\/p>\n

As for Kraken, Powell claims his exchange operates with high standards. \u201cMuch of what the regulators imagine should be done is already being done voluntarily,\u201d he said. \u201cWe push back only where we have a strong view that the regulator is getting the issue wrong, and where the consumer might actually be put in a worse position, or where a government agency is dramatically overstepping bounds.\u201d<\/p>\n

Powell summed up: Although Kraken is happy to work with regulators and law enforcement, \u201cwe will not stand by silently while rights are trampled on.\u201d<\/p>\n

Regardless, calling out regulators, who tend to wield a lot of power in the space, is a bold move for an exchange contemplating listing 1,600 new coins<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Although Kraken is happy to work with regulators and law enforcement, \u201cwe will not stand by silently while rights are trampled on,” says CEO Jesse Powell.<\/p>\n","protected":false},"author":3488,"featured_media":21384,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[2347,357,3350,760,2924],"class_list":["post-21383","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-bitlicense","tag-exchanges","tag-jesse-powell","tag-kraken","tag-new-york"],"author_data":{"id":3488,"name":"Amy Castor","nicename":"amy-castor","avatar_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/12\/amy-castor-promo-image-96x96.jpg"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/someones-got-to-be-the-voice-of-reason-kraken-responds-to-ny-ag-report.jpg","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/21383","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/3488"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=21383"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/21383\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/21384"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=21383"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=21383"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=21383"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}