The price of bitcoin dropped Tuesday after news broke that the New York Attorney General has launched an investigation into 13 cryptocurrency exchanges, although exactly what the office is investigating isn’t entirely clear.

The price drop, surprising to some given that the market believed that bitcoin could rally after the U.S. Internal Revenue Service filing date Tuesday, saw bitcoin drop more than $200 at exactly 1:52 p.m. EDT, to $7,872.25, before creeping back up to $7,932.09 as of 10:45 p.m. EDT. However, the IRS has extended the tax deadline until April 18 because of system issues, so it may be premature to write off a post-tax filing bounce quite yet.

Back in New York, uncertainty as to exactly what the Attorney General Eric Schneiderman is up to didn’t help. Schneiderman claimed that the investigation, dubbed the “Virtual Markets Integrity Initiative,” isn’t an investigation but a “fact-finding mission.” Whatever it is, it involves letters being sent to major exchanges “requesting disclosures on their operations, use of bots, conflicts of interest, outages and other key issues.”

“With cryptocurrency on the rise, consumers in New York and across the country have a right to transparency and accountability when they invest their money,” Schneiderman said in a statement. “Yet too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms. Our Virtual Markets Integrity Initiative sets out to change that, promoting the accountability and transparency in the virtual currency marketplace that investors and consumers deserve.”

Because of the murky language, what effect the investigation/ fact-finding mission may have on the cryptocurrency industry is pure speculation at this point. But as Business Insider noted, it could have a “possible chilling effect on the crypto space at large.”

Indeed, those receiving letters are a Who’s Who of U.S. and foreign cryptocurrency companies with New York City offices. The list consists of Coinbase Inc. (GDAX), Gemini Trust Co., bitFlyer USA Inc., iFinex Inc. (Bitfinex), Bitstamp USA Inc., Payward Inc. (Kraken), Bittrex Inc., Circle Internet Financial Ltd., Binance Ltd., Elite Way Developments LLP, Gate Technology Inc., itBit Trust Co. and Huobi Global Ltd.

The exchanges are taking the investigation in their stride. Gemini Chief Executive Officer Tyler Winklevoss told Coinbase that his company “applauds” the Attorney General’s inquiry and that the exchange looks forward to “cooperating with and submitted our responses to the questionnaire.”

Photo: 3weg