Lawmakers, in an effort to improve consumer protection, are asking government agencies as well as major crypto exchanges for more information on what they are doing regarding cryptocurrency fraud.
why is it important: The House Oversight Subcommittee on Economic and Consumer Policy has used his clout in Washington to lobby companies for information on everything from metal toxicity in infant formula to advertising practices for e-cigarettes. Last Request – All Crypto Fraud Related Documents dated January 1, 2009 (or whichever is earlier depending on the companies’ respective founding dates), is due by September 12.
What is happening“Given the growing popularity of cryptocurrencies both as a form of payment and as an investment, I am concerned about the rapid growth in fraud and consumer abuse,” said Rep. Raja Krishnamoorthi (D -Ill.), chairman of the subcommittee, said in letters to government agencies as well as major exchanges.
- The letters were sent on Tuesday to Treasury Secretary Janet Yellen, U.S. Securities and Exchange Commission Chairman Gary Gensler, Lina Khan of the Federal Trade Commission, Rostin Behnam of the Commodity Futures Trading Commission as well as to leaders of major crypto exchanges at Coinbase Global, FTX US, Binance. , Kraken and KuCoin.
Details: Krishnamoorthi cited the FTC’s estimate that losses from crypto scams are on track to top $1 billion this year.
- “I am also concerned about the apparent lack of action by cryptocurrency exchanges to protect consumers transacting through their platforms,” he said.
- Coinbase, FTX US, Binance and Kraken did not immediately respond to requests for comment.
To note: The MP is a member of the Congressional Blockchain Caucusa bipartisan group formed to bring industry and lawmakers together to study blockchain technology.
The context: The subcommittee’s fact-finding mission comes amid a series of reports due to be released soon pursuant to President Joe Biden’s executive order in March that, among other things, instruct major consumer watchdogs FTC and the Consumer Financial Protection Bureau to determine how to control crypto transactions.
- The CFPB published in May a execution notecombat deceptive practices, including misuse of the Federal Deposit Insurance Corporation logo or misrepresentation of deposit insurance coverage.
- Meanwhile, the FTC has focused on crypto scams and stepped up the release of educational crypto materials.
The other sideMany of the biggest crypto exchanges, for their part, have engaged in publishing educational material in blog posts, tweets, and entire sites dedicated to detailing the intricacies of investing in digital assets.
- FTX launched “Get to Know Crypto” this month.
- Coinbase Global just rolled out a voter registration tool saying it was part of a “wider education initiative” in a blog post last week and has an explainer on all different ways scammers could target them.
- Binance also has a guide to identify and avoid crypto scams and offers personal finance tips.
The bottom line“By implementing auditing policies, requiring certain disclosures, delisting, and adopting other security mechanisms, cryptocurrency exchanges can and should create safer environments for consumers,” said said Krishnamoorthi.