Washington, D.C. - Today, Rep. Raja Krishnamoorthi, Chair of the Subcommittee on Economic and Consumer Policy, sent letters to four federal agencies-the U.S. Department of Treasury, Securities and Exchange Commission, Commodity Futures Trading Commission, and Federal Trade Commission -and five digital asset exchanges-Binance.US, Coinbase, FTX, Kraken, and KuCoin -requesting information about the steps they are taking to combat cryptocurrency-related fraud and scams and additional actions that are needed to protect Americans.
“As stories of skyrocketing prices and overnight riches have attracted both professional and amateur investors to cryptocurrencies, scammers have cashed in. 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," wrote Chairman Krishnamoorthi. “For all these reasons, I am concerned about the growth of fraud and consumer abuse linked to cryptocurrencies."
Cryptocurrency is a form of digital currency based on a digital ledger technology called blockchain. Digital assets are kept in an anonymous digital wallet and can be bought, sold, or traded. These transactions occur on digital asset exchanges and cannot be reversed once made. Cryptocurrencies have become scammers’ favored means of payment as well as their preferred bait for unsuspecting victims, with the annual amount of cryptocurrency lost to fraud on track to surpass $1 billion this year.
While the private sector has taken some steps to protect consumers and investors and curb cryptocurrency fraud, significant risk remains. Consumers are often unaware of the patchwork of resources available to inform their cryptocurrency investing decisions, and insurance companies are reluctant to provide insurance to individual consumers given the lack of regulation of digital assets. Despite these vulnerabilities, the federal government has been slow to curb cryptocurrency scams and fraud, and existing federal regulations do not comprehensively or clearly cover digital assets under all circumstances.
Chairman Krishnamoorthi requested the federal agencies and digital asset exchanges provide information that can help Congress understand what they are doing to protect consumers and inform legislative solutions to bring stability to the digital asset industry.
