Rep. Raja Krishnamoorthi (D-Ill.), chair of the U.S. House Subcommittee on Economic and Consumer Policy, sent a letter to four federal regulators – Treasury Department, Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) and Federal Trade Commission (FTC) – and five crypto-exchange companies – Binance.US, Coinbase, FTX, Kraken and KuCoin – to gather information on actions being taken to prevent and address crypto-related fraud and scams.
“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,” Krishnamoorthi wrote. “For all these reasons, I am concerned about the growth of fraud and consumer abuse linked to cryptocurrencies.”
An FTC report found that the annual amount of cryptocurrency lost to fraud and scams is on track to surpass $1 billion this year. The FBI sent out a warning that criminals are exploiting vulnerabilities on decentralized finance (DeFi) platforms to steal crypto assets.
“Cybercriminals seek to take advantage of investors’ increased interest in cryptocurrencies, as well as the complexity of cross-chain functionality and open source nature of DeFi platforms,” the FBI’s warning said.
Krishnamoorthi requested the federal agencies and crypto 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.
A bill proposed by Sens. Kirsten Gillibrand (D-N.Y.) and Cynthia Lummis (R-Wyo.) would create the first set of legal definitions and regulatory framework by which digital assets, like cryptocurrencies, may be regulated and specifically designates the agencies responsible for the oversight of the industry.