Congressman Flags Rising Crypto Fraud, Demands Answers From Regulators

Rep. Raja Krishnamoorthi (D-Ill.), who heads the House Oversight and Reform Committee subcommittee on economic and consumer policy, said the federal government “has been slow to fight against cryptocurrency scams and fraud” as consumer losses remain on track for $1 billion this year.

“Without clear definitions and guidance, agencies will continue their infighting and be unable to effectively implement consumer and investor protections related to cryptocurrencies and the exchanges on which they are traded,” Krishnamoorthi wrote in letters sent. Tuesday to Treasury Secretary Janet L. Yellen, Gary Gensler, Chairman of the Securities and Exchange Commission, Lina Khan, Chairman of the Federal Trade Commission, and Rostin Behnam, Chairman of the Commodity Futures Trading Commission.

Major cryptocurrency exchanges, meanwhile, have demonstrated an “apparent lack of action” to protect their customers, he wrote in another missive to chief executives. Binance.FR, Coinbase, FTX, Kraken and KuCoin. He pointed to platforms listing digital tokens with “little or no verification”, inadequate security measures to protect deposits, and insufficient oversight to prevent illicit activity.

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“Consumers are often unaware of the current mosaic of resources available to inform their investment decisions, and insurance companies are reluctant to provide insurance to individual consumers given the lack of regulation of digital assets,” said writes Krishnamoorthi.

It demands detailed information from regulators and industry leaders by September 12 on what they are doing to prevent abuse.

It’s unclear whether Krishnamoorthi’s efforts will lead to hearings or an effort to craft a bill, though he said in his letter to regulators that Congress “may need to pass legislation” to bring about stability to the crypto market.