Kraken Reveals It Won’t Comply With New York Attorney General’s “Insulting” Probe

  • Kraken CEO Jesse Powell revealed the cryptocurrency exchange won't comply with the New York Attorney General's probe.
  • Per his words, the move is insulting, and helps justify the exchange's move to leave the state in 2015.

San Francisco-based cryptocurrency exchange Kraken isn’t going to respond to the inquiry New York Attorney General Eric Schneiderman sent 13 different cryptocurrency exchanges. Per Jesse Powell, Kraken’s CEO, the probe is insulting.

Schneiderman’s probe is part of a new Virtual Market Integrity Initiative, which as covered plans to “promote accountability and transparency” in the cryptocurrency markets. As part of its initiative, Schneiderman’s office sent the cryptocurrency exchanges 34-point questionnaires, instructing them to have them complete early next month.

While most cryptocurrency exchanges reportedly reacted positively to the probe, publicly revealing they looked forward to cooperating with the regulators, Kraken made it clear it doesn’t plan on answering the questionnaire.

Via Twitter, the exchange’s CEO wrote:

“Kraken’s BitLicense-prompted exit from New York in 2015 pays another dividend today. When I saw this 34-point demand, with a deadline 2 weeks out, I immediately thought ‘The audacity of these guys — the entitlement, the disrespect for our business, our time! The resource diversion for this production is massive. This is going to completely blow up our roadmap!’ Then I realized that we made the right decision to get the hell out of New York three years ago and that we can dodge this bullet.”

Jesse Powell

In his comments, Powell alluded to Kraken leaving the state of New York in 2015, when the state’s Department of Financial Services (NYDFS) introduced the BitLicense, causing a “Great Bitcoin Exodus.” The controversial license required crypto-related businesses to go through a rigorous regulatory process before serving the state’s residents.

Through a blog post at the time Kraken – one of the biggest cryptocurrencies exchanges in the world – called the BitLicense a “creature so foul, so cruel that not even Kraken possesses the courage or strength to face its nasty, big, pointy teeth.”

Powell noted that Kraken is generally happy to help regulators understand crypto exchange’s the ecosystem, but added that the New York Attorney General’s Office was using a “tone-deaf” approach, and argued the state was hostile towards not only cryptocurrencies, but businesses in general.

In his tweet, he even asked why the company didn’t probe businesses actually operating in the state of New York, reaffirming the exchange left the state because of similar moves. He noted:

“Somebody has to say what everybody's actually thinking about the NYAG's [New York Attorney General’s] inquiry. The placative kowtowing toward this kind of abuse sends the message that it's ok. It's not ok. It's insulting.”

Jesse Powell

Featured image via YouTube,Economist Test Prep

Chinese Yuan 'Inversely Correlated' with Bitcoin, Amidst US-China Trade Wars

Since January 2018, China and the US have been involved in an intense trade war in which both countries have significantly increased tariffs on imported goods and services.

Due partly to the rising tension between the two countries, the Chinese yuan (CNY) has been losing value against the USD. During the same time period, the price of bitcoin (BTC) and other major cryptoassets has been surging.

As noted by the South China Morning Post (SCMP), the value of BTC, the world’s most dominant cryptocurrency, increased by 26.5% to $7,878 during the time period from May 5 to May 17. Notably, US President Donald Trump had announced on May 5 that he would further increase tariffs on goods imported from mainland China.

Chinese Yuan Weakens as Nation’s Government Responds to Increased Tariffs

The SCMP pointed out that the yuan dropped to its lowest level since the past six months after the Chinese government responded to Trump administration’s decision to impose higher tariffs on China.

Commenting on the price fluctuations of both the yuan and bitcoin, Garrick Hileman, a Macroeconomics Researcher at London School of Economics (LSE) and Head of Research at Blockchain.com, remarked:

We are observing a strong inverse correlation between the [Renminbi] RMB’s value and bitcoin, meaning that recent RMB declines over trade tensions have been closely matched by increases in the value of bitcoin.

“Correlation Does Not Necessarily Equal Causation”

Hileman also mentioned that we “cannot be 100% certain” that the bitcoin price has been increasing due to heightened concerns regarding trade tensions and the corresponding decline in the value of the yuan. The blockchain researcher stated:

Trade tensions and declines in the RMB’s exchange rate as correlation does not necessarily equal causation.

Hileman, who earned his Phd from LSE, revealed:

This is not the first time we’ve seen significant increases in the value of bitcoin taking place alongside yuan concerns.

He added that there’s “growing recognition of bitcoin as ‘digital gold’ and it being used as a hedge against various macroeconomic risks.”

“This Year, the Narrative Is Bitcoin, Bitcoin, Bitcoin”

According to the SCMP, bitcoin’s price may have surged recently due to the generally positive remarks made about it at the Consensus 2019 conference.

Meltem Demirors, the Chief Strategy Officer at CoinShares, a crypto treasury management firm, has also confirmed recently that the narrative this year has been mostly about Bitcoin. Demirors revealed that both institutions and retail investors are “feeling good” and are “more confident” about the long-term potential of Bitcoin and the evolving ecosystem that supports it.