US Congress Inquires 5 Crypto Exchanges about $1B Frauds

The committee sent letters to Coinbase, FTX, Binance.US, Kraken and KuCoin asking for info about what steps they are taking to safeguard consumers against scams.
US Congress inquires 5 crypto exchanges about $1B frauds

The US Congress issues inquiries to five major exchanges regarding $1 billion worth of losses in crypto fraud since 2021. The House Committee on Oversight and Reform is stepping up its efforts pushing federal agencies and crypto exchanges to protect Americans from fraudsters and scams.

The Committee, led by Illinois eighth district congressional representative Raja Krishnamoorthi, sent letters to four agencies including SEC Chair Gary Gensler, Treasury Secretary Janet Yellen, Commodity Futures Trading Commission Chair Rostin Behnam, and Federal Trade Commission Chair Lina Khan.

The letters were also sent to five major crypto exchanges namely Coinbase, FTX, Binance.US, Kraken and KuCoin. The letter demands documents and information about what steps these exchanges are taking to safeguard consumers against scams.

As per research from FTC, over $1 billion in crypto has been exploited in fraud since 2021. The most recent Chainalysis report notes a rise in crypto hacks & fall in crypto scams. The reports also mentioned that the hacks are largely focused on funds from DeFi protocols.

Rep. Raja Krishanamoorthi, D.-Ill., Chair of the Subcommittee on Economic and Consumer Policy, stated that as stories of increasing prices and overnight riches attracted both amateurs and professional investors to the crypto space, scammers have cashed in.

Krishnamoorthi believes that the lack of a central authority to flag suspicious transactions and the irreversibility of transactions made it a preferred transaction method for scammers. Moreover, the limited understanding many investors and consumers have of the underlying technology makes it more vulnerable to fraudsters.

The letter asks the crypto exchanges and federal agencies to respond by September 12 with information associated with what they are doing to prevent scams. The committee says these responses would be used to craft legislative solutions.

The letters also demand the exchanges to produce documents dating back through January 1, 2009, which demonstrates efforts to combat crypto fraud and scams. 

These documents are required from exchanges to show relevant attempts made to identify, investigate, and remove potentially fraudulent digital assets or accounts. The letters highlighted the discussions around whether to adopt more stringent policies. 

Also Read: 7 Common Crypto Scams on Twitter

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