U.S. Congress questions Coinbase, FTX, Binance, Kraken in fight against crypto-currency fraud

A House of Representatives committee has sent letters to four U.S. federal agencies and five crypto-currency exchanges requesting information on what they are doing to combat crypto-currency fraud and scams.

U.S. Congress questions regulators and crypto-currency exchanges

The House Oversight and Reform Committee on Tuesday sent letters to four U.S. federal agencies and five crypto-currency exchanges in an effort to combat crypto-currency-related fraud and scams.

The four agencies are 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-currency trading platforms are Coinbase, FTX US, Binance US, Kraken and Kucoin.

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The letters ask “Information on the steps they are taking to combat crypto-currency 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 crypto-currencies, 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 crypto-currencies 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 transactions, and the limited understanding many consumers and investors have of the underlying technology make crypto-currencies a preferred method of transaction for scammers“, Raja Krishnamoorthi pointed out.

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The legislator added:

For all of these reasons, I am concerned about the growth of fraud and consumer abuse related to crypto-currencies.

Federal regulation notwithstanding, crypto-currency 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, crypto-currency exchanges can – and should – create safer environments for consumers“, the congressman detailed.

The letters ask federal agencies and crypto-currency exchanges to provide documents dating from January 2009 to the present by Sept. 12.

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