U.S. Congress questions Coinbase, FTX, Binance, Kraken asking for information on what they are doing to combat cryptocurrency fraud and scams.
Cryptocurrency exchanges must themselves act to protect consumers
On August 30, Raja Krishnamoorthi, chairman of the House Committee on Oversight and Reform’s Economic and Consumer Policy Subcommittee, wrote a letter to one of the largest and most popular crypto exchanges in the U.S. requesting “information and documents” showing how several companies are working to “combat crypto-related fraud.
The committee is an active member of the U.S. House, which collectively forms Congress with the U.S. Senate, and is likely preparing to introduce and debate bills and other legislation, including laws governing crypto.
The letters ask federal agencies and cryptocurrency exchanges to provide documents dating from January 2009 to the present by September 12.
The four agencies are as follows:
- Department of the Treasury,
- the Federal Trade Commission (FTC),
- the Commodity Futures Trading Commission (CFTC),
- and the Securities and Exchange Commission (SEC).
The five crypto-trading platforms are Coinbase, FTX US, Binance US, Kraken and Kucoin.
The letters request “information on the steps they are taking to combat crypto-related fraud and scams and what additional actions are needed to protect Americans,” explained Representative Raja Krishnamoorthi (D-IL), who signed the letters.
Raja Krishnamoorthi, who chairs the Subcommittee on Economic and Consumer Policy, commented:
While stories of skyrocketing prices and overnight wealth have drawn professional and amateur investors to cryptos, scammers have taken advantage.
The FTC said in June that since the beginning of 2021, more than 46,000 people have reported losing more than $1 billion in cryptos to scams. “That’s about one in four dollars reported lost, more than any other payment method,” the regulator noted.
“The lack of a central authority to report suspicious transactions in many situations, the irreversibility of the transactions and the limited understanding that many consumers and investors have of the underlying technology make cryptos a preferred method of transaction for scammers,” Raja Krishnamoorthi noted.
The lawmaker added:
For all these reasons, I am concerned about the development of fraud and consumer abuse related to cryptocurrencies.
“Federal regulation notwithstanding, crypto-exchanges must themselves act to protect consumers transacting through their platforms. By implementing auditing policies, requiring certain disclosures, removing listings and adopting other security mechanisms, cryptocurrency exchanges can, and should create safer environments for consumers,” the congressman detailed.