New York calls for more scrutiny of cryptocurrency exchanges as it launches 'fact-finding' inquiry

 New York attorney general Eric Schneiderman has called for tougher scrutiny of cryptocurrency markets, claiming investors are not given the "basic facts" to assess whether to use trading platforms.

Mr Schneiderman said he was launching a fact-finding inquiry, which will analyse the policies and practices of 13 platforms where digital currencies are traded.

His comments come just months after the US markets regulator warned over the risks of "fraud and manipulation" in the market.

The Securities and Exchange Commission said: "There is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation."

It has in recent months been issuing a number of information requests and subpoeanas to companies looking to pursue initial coin offerings, through which they can raise money by issuing "token assets" similar to cryptocurrencies.

These requests are part of its attempts to crack down on fraudulent activity by individuals to raise funds for businesses which do not exist.

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The New York attorney general's office today joined calls for consumers to be offered more "transparency and accountability" when they invest their money in cryptocurrencies. 

Mr Schneiderman said his office had launched its own Virtual Markets Integrity Initiative to help protect investors, as "published reports indicate the sector has attracted fraudsters, market manipulators, and thieves".

He said it was a "highly speculative sector, featuring significant volatility, instability, and risk", and that consumers, too often "don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms".

The price of Bitcoin dipped on the calls for more oversight, down 1.8pc on the day, while Ethereum was down 1.6pc.

In the UK, MPs are currently undertaking their own investigation into the risk posed by cryptocurrencies, including volatility, money laundering and cybercrime. 

The Treasury Committee will decide whether the Government, financial watchdog and the Bank of England should regulate digital coins.