Congress needs to know what Coinbase, Binance.US, FTX, Kraken, and KuCoin are doing to handle scams associated to cryptocurrency. In separate letters sent to each crypto alternate, the Home Committee on Oversight and Reform expresses concern over “the speedy development of fraud and shopper abuse,” in addition to the “lack of motion by cryptocurrency exchanges to guard customers conducting transactions.”
The committee’s letters cite data from the Federal Trade Commission (FTC) indicating that over 46,000 folks within the US misplaced a mixed $1 billion on account of crypto scams because the begin of 2021, with people dropping $2,600 on common. Funding and romance scams have been notably profitable for dangerous actors, who collected about $575 million and $185 million from both scheme, respectively.
Moreover, the letters additionally name consideration to points associated to fraudulent listings that scammers use to conduct “rug pulls,” or the act of hyping up a coin to extend its worth, solely to close down the undertaking and make off with the belongings themselves. Lawmakers say some exchanges “permit digital belongings to be listed with little or no vetting,” which prevents exchanges from discovering potential vulnerabilities and places customers susceptible to theft.
Legislators have causes to be involved about fraudulent listings. Coinbase is at the moment beneath investigation by the Securities and Alternate Fee (SEC) over whether it allowed users to trade unregistered securities. This explicit investigation is separate from the case that charges a former Coinbase employee with wire fraud. The previous worker concerned within the case allegedly tipped off his brother and pal about upcoming itemizing bulletins on the alternate, which is usually when a token will increase in worth.
The federal government’s scrutiny in opposition to crypto has solely elevated amidst a crypto crash that has despatched the worth of stablecoins plummeting, bankrupted crypto companies, and triggered mass layoffs. In July, the Commodity Futures Buying and selling Fee (CFTC), Federal Bureau of Investigation (FBI), and the Division of Justice (DOJ) announced that they’re cracking down on crypto scammers in some kind. Every company opened instances in opposition to completely different fraudsters, all of whom managed to get away with thousands and thousands or billions of {dollars}.
The committee is asking FTX, Binance, Coinbase, KuCoin, and Kraken to offer documentation associated to their efforts to stop scams, carry out audits, examine fraudulent listings, and extra. The businesses should submit the paperwork by September twelfth, 2022. Along with the exchanges, the committee additionally requested the Division of the Treasury, the FTC, the CFTC, and the SEC how they plan to handle scams.
