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The US Congress committee sent letters to five major crypto exchanges requesting information about the measures they’ve undertaken to prevent crypto fraud.
Four agencies including the US Department of Treasury, Securities and Exchanges Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the Federal Trade Commission and five other exchanges were addressed by the Chair of the Subcommittee on Economic and Consumer Policy, Rep. Raja Krishnamoorthi.
These inquiries are a part of an attempt from Congress to tighten the regulations around the crypto industry in the U.S. in a process to determine the appropriate regulatory agency to oversee the crypto industry.
Congress Against Crypto Frauds
Five exchanges, including Coinbase, FTX, Binance.US, Kraken and KuCoin were requested to provide information and documents for the last 14 years, along with the exchanges’ protocols to identify and deal with fraudulent cryptocurrencies and accounts on their platform.
The exchanges were also asked to give information about the tools and processes they had in place to reduce the risk of fraud, which are to be submitted by September 12, along with suggestions for the federal government on what they should be doing to prevent crypto scams in the industry.
Four other agencies were also asked to provide information on the measures they’ve undertaken to protect consumers in the crypto space.
The Economic and Consumer Policy committee remains one of the most influential groups in the U.S House of Representatives. As they hold jurisdiction over a range of public matters and the power to create and change laws as required.
The crypto space didn’t garner much attention from authorities previously, however, owing to the recent collapse of Voyager and Celsius, Congress has been more focused on regulating the industry and providing better protection for the consumers.
Citing the prevalence of scams in the industry, Krishnamoorthi stated: “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”.
He further added: “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,” elaborating on the need for regulations.
One spokesperson from Kraken has responded so far with an email that read
“Robust Fraud Prevention Procedures in place (at the firm) to safeguard its clients from the moment they set up an account with us. In addition to myriad protocols to monitor and Treeze suspicious transactions, we have a range of procedures and educational resources tailored to help our clients spot common fraud warning signs.”
This was the committee’s first interaction with the industry and consumers can expect more involvement moving forward.
Crypto Industry Home To Scams
A report from the US Federal Trade Commission (FTC) mentioned over $1 billion worth of assets stolen from investors over roughly the last year. Wherein more than 40,000 investors were affected by these dealings. Most of which included meme coins and Bitcoin tokens.
There has been an incremental growth in the number of crypto scams over the years, most of which have been due to hacks and exit scams.
As an investor, you should make conscious decisions and avoid anything that sounds like a “get rich quick” scheme. Only invest in legitimate projects that have strong fundamentals and a credible community.
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