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NYDFS boosts crypto fraud detection capabilities

Source: New York State Department of Financial Services

New York State Department of Financial Services (DFS) Superintendent Adrienne A. Harris today announced the Department has enhanced its ability to detect fraud and other illegal activity among New York State-regulated entities engaged in virtual currency activity through new insider trading and market manipulation risk monitoring tools.

“This is a significant step in our supervision of the virtual currency industry as it continues to quickly transform and mature,” Superintendent Harris said. “These tools will help us combat financial crime and fraud, hold regulated entities accountable, and further strengthen our national leadership in virtual currency supervision.”

The new enhancements will provide the Department with additional capabilities to detect potential insider trading, market manipulation, and front-running activity associated with Department-regulated entities’ and applicants’ exposure or potential exposure to listed virtual currency wallet addresses.

DFS has been in close contact with New York State-regulated virtual currency entities in light of recent events in the virtual currency market space. Today’s announcement builds upon recently issued Guidance regarding the use of blockchain analytics; first-in-the-nation criteria for USD-backed stablecoins; new Guidance to better protect customers in the event of a virtual currency insolvency or similar proceeding; and previously issued Guidance related to preventing market manipulation and other wrongful activity. DFS continues to use all of its regulatory tools to keep pace with the industry, make data-driven policy decisions, and respond proactively to the virtual currency market.  

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