Coinbase, the U.S.-based cryptocurrency exchange startup, has publicly shared part of its response to New York Attorney General Eric Schneiderman’s ongoing inquiry.
“We applaud the [Office of the Attorney General] for taking action to bring further transparency to the virtual currency markets,” Coinbase’s chief legal and risk officer Mike Lempres wrote in a five-page letter.
Schneiderman’s office launched a “fact-finding inquiry” into cryptocurrency exchanges in April, sending a detailed questionnaire to 13 firms, including Coinbase. The inquiry seeks a wide range of information about exchanges’ operations, their leadership, funding, terms of service, privacy protocols, relationships with other financial institutions and use of trading “bots.”
In the public version of Coinbase’s reply, Lempres addresses the assets kept on Coinbase’s platform ($150 billion in total), the firm’s funding ($225 million to date), its financial position (“a profitable and self-sustaining business”), and its personnel levels (over 300 employees, 1,000 total when you factor in contractors).
The letter describes Coinbase’s cooperation with law enforcement and regulatory agencies across the globe, its “state of the art” cybersecurity program, and its recent systems upgrades, which Lempres says enabled the platform to achieve 99.99% uptime in April.
It also says Coinbase is a federally regulated money service business and has been granted licenses by regulatory authorities in 31 states, including New York’s BitLicense. The letter notes that this controversial license involves “considerable regulatory oversight.”
Yet Coinbase’s full response to Schneiderman’s request will likely remain out of the public eye, per a request from the startup.
Lempres asked for “confidential treatment” for the full response, which the exchange is transmitting “via an encrypted end-to-end secure file exchange service consistent with our security protocol.”
Rachael Horowitz, Coinbase’s vice president of communications, later told CoinDesk via email:
“That full response has a bunch of highly confidential information that we are unable to share publicly. Our aim is to be as transparent as we can in responding to this action publicly so we shared the cover letter.”
Most exchanges CoinDesk contacted welcomed the New York Attorney General’s inquiry, but Kraken, an exchange that left New York due to the BitLicense, pointedly refused to cooperate.
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