Digital Assets: Congress Wants Action Taken Reports On Crypto Fraud From Agencies, Digital Exchanges

September 2, 2022 | Digital Assets, News, Regulations

The House Committee on Oversight and Reform has demanded details on what the agencies and exchanges are doing to prevent crypto scams and fraud.

The Committee shot off a series of letters earlier this week to four agencies, including the Department of the Treasury, the Federal Trade Commission, the Commodity Futures Trading Commission, and the Securities and Exchange Commission, as well as five digital asset exchanges — Coinbase, FTX, Binance.US, Kraken, and KuCoin, asking for details of actions taken to “identify, investigate, and remove or flag potentially fraudulent digital assets or accounts,” as well as highlight discussions around “whether to adopt more stringent policies.” (CNBC)


The Committee wrote to Gary Gensler, Chairman, SEC, highlighting that the annual amount of cryptocurrency lost to fraud is on track to surpass $1 billion in 2022 and that multimillion-dollar cryptocurrency scams had become a regular occurrence.

“I am also concerned by the apparent lack of a consensus or coordinated action from executive branch agencies to classify and regulate cryptocurrencies in order to prevent fraud and abuse,” wrote Raja Krishnamoorthi, Chairman, Subcommittee on Economic and Consumer Policy.

“Without clear definitions and guidance, agencies will continue their infighting and will be unable effectively to implement consumer and investor protections related to cryptocurrencies and the exchanges on which they are traded,” Krishnamoorthi wrote.

“Congress may need to pass legislation to help bring stability to the digital asset industry and protect consumers from investment fraud and abuse, but more information is needed to understand what the relevant federal agencies are already doing, both individually and through the interagency process.”


Krishnamoorthi also wrote to Sam Bankman-Fried, Chief Executive Officer and Founder, FTX US:

“Given the growing popularity of cryptocurrencies both as a form of payment and as an investment, I am concerned by the rapid growth of fraud and consumer abuse. I am also concerned by the apparent lack of action by cryptocurrency exchanges to protect consumers conducting transactions through their platforms.”

“Notwithstanding federal regulations, cryptocurrency exchanges must themselves act to protect consumers conducting transactions through their platforms. By implementing audit policies, requiring certain disclosures, delisting, and adopting other safety mechanisms, cryptocurrency exchanges can—and should—create safer environments for consumers.”

The agencies and exchanges need to respond by Sept. 12 with information about what they are doing to protect consumers.

Furthermore, the exchanges need to produce supporting documents dating back through Jan. 1, 2009 in this regard.

Related Story: Niches Of The Cryptocurrency Market Have “Real Crash Potential” (Bankman-Fried)

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