On Tuesday, the New York Attorney General’s office sent letters of inquiry to more than a dozen digital currency exchanges, requesting information about their ownership, user fees, money laundering, and other areas of concern. The move was welcomed by several large exchanges, including the Winklevoss-owned Gemini exchange. Kraken CEO Jesse Powell, however, announced on Twitter that his company will not comply with the request.
The Attorney General’s spokesperson, Amy Spitalnick, claimed that the exchanges should be happy to comply with the inquiry:
"Legitimate entities generally like to demonstrate to their investors that their money will be protected. This is very basic information that any credible platform should have on hand and be willing to share with their investors.”
Powell’s tweet argues that the request demonstrates the disconnect between government officials and the reality of the marketplace. He criticized the May 1 compliance deadline as well, and suggested that compliance would require a massive diversion of resources:
Powell also described the request as abusive, writing, “Somebody has to say what everybody's actually thinking about the NYAG's inquiry. The placative kowtowing toward this kind of abuse sends the message that it's ok. It's not ok. It's insulting.”
The Kraken exchange had withdrawn from the New York market in 2015, citing the state’s BitLicense regulatory regime.
Kraken’s refusal to comply with the information request is unlikely to be the last word on the matter, however. A report from MarketWatch claims that the Attorney General’s office has already said that it has ““enforcement jurisdiction over foreign businesses [meaning those based outside of New York] operating in New York.”