Congress Questions Coinbase, FTX, Binance, Kraken in Crypto Fraud Crackdown

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A House committee has sent letters to four U.S. federal agencies and five cryptocurrency exchanges asking for information about what they are doing to combat cryptocurrency fraud and scams.

Congress Questions Regulators and Crypto Exchanges

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

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

The letters request “information about the steps they are taking to combat cryptocurrency-related fraud and scams and additional actions that are needed to protect Americans,” explained Rep. Raja Krishnamoorthi (D-IL), who signed the letters.

Krishnamoorthi, who chairs the Subcommittee on Economic and Consumer Policy, commented:

As stories of skyrocketing prices and overnight riches have attracted both professional and amateur investors to cryptocurrencies, scammers have cashed in.

The FTC said in June that since the start of 2021, more than 46,000 people have reported losing over $1 billion in crypto to scams. “That’s about one out of every four dollars reported lost, more than any other payment method,” the regulator noted.

“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,” Krishnamoorthi emphasized.

The lawmaker added:

For all these reasons, I am concerned about the growth of fraud and consumer abuse linked to cryptocurrencies.

“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 congressman detailed.

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

What do you think about Congress questioning federal agencies and crypto exchanges about their measures against cryptocurrency fraud and scams? Let us know in the comments section below.