The US House of Committee on Oversight and Reform has stepped up to fight against crypto fraud. The Committee issued letters to four US federal agencies and five cryptocurrency exchanges on Tuesday, 30th August, inquiring about what they are doing to combat crypto fraud and scams. According to the Federal Trade Commission (FTC), over $1 billion has been lost to crypto-related scams since 2021.
Binance US, FTX US, Coinbase, Kraken, and Kucoin are the five exchanges that received the Committee’s letters. The federal agencies include the Department of the Treasury, the Federal Trade Commission (FTC), the Commodity Futures Trading Commission (CFTC), and the Securities and Exchange Commission (SEC).
Per the Chairman of the Sub-Committee on Economic and Consumer Policy, Rep. Raja Krishnamoorthi (D-IL), who also signed the letters, “the letters demand information from the affected parties “about the steps they are taking to combat cryptocurrency-related fraud and scams and additional actions that are needed to protect Americans.” Krishnamoorthi also added:
“As stories of skyrocketing prices and overnight riches have attracted both professional and amateur investors to cryptocurrencies, scammers have cashed in.”
The cryptocurrency space has proven to be a literal Wild West following the absence of clear-cut regulations. Besides crypto scams, billions of dollars have been lost to different exploits since this year, with the most recent being the Nomad bridge and Solana hack. CNBC put the figure on crypto exploits at $1.4 billion.
On the absence of specific regulations against crypto scams, Krishnamoorthi commented:
“The lack of a central authority to flag suspicious transactions in many situations, the irreversibility of transactions, and the limited understanding many consumers and investors have of the underlying technology make cryptocurrency a preferred transaction method for scammers,”
In his words, the lawmaker is concerned about the growth of fraud and consumer abuse linked to cryptocurrencies. He added that cryptocurrency exchanges are responsible for protecting their users, citing the following measures— implementing audit policies, requiring certain disclosures, delisting, and adopting other safety mechanisms. According to him, they can create a safer environment for their users by adopting these measures.
The letters mandate a September 12 deadline for the affected parties to provide documents dating back to January 2009, showing their efforts in combating crypto fraud and scams.
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