On Aug. 30, the US House Oversight Committee’s subcommittee on economic and consumer policy demanded answers from regulators as to how they would fight against the crypto scams that have plagued the industry.
The Committee, led by Illinois eighth district congressional representative Raja Krishnamoorthi, sent letters to Treasury Secretary Janet Yellen, Securities and Exchange Commission Chair Gary Gensler, Federal Trade Commission Chair Lina Khan, and Commodity Futures Trading Commission Chair Rostin Behnam. His message also went to crypto trading platforms like Coinbase, FTX, Binance.US, Kraken, and KuCoin demanding an explanation of the measures taken to curb the fraud and scams that are prevalent in the sector.
“As stories of skyrocketing prices and overnight riches have attracted both professional and amateur investors to cryptocurrencies, scammers have cashed in,” wrote Krishnamoorthi. “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 added.
Crypto abuse, fraud, and scams need regulation Congressman
The Congressman in his letters also claims that the federal government has shown zero progress to stop crypto investment schemes, even after the Federal Trade Commission reported that about $1 billion has been lost in crypto scams this year. The FTC’s research also highlighted that in 2021, $575 million of all crypto fraud losses reported to the FTC involved bogus investment opportunities.
“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,” Krishnamoorthi wrote in his letters.
The Representative, who is expecting a response by Sept. 12, took to Twitter to announce the action taken, attracting feedback from angry Americans over the fraud scam.
“Cryptocurrency is a Ponzi scheme and an environmental crime,” said one Tweet in response to Raja.
Concerns spread to DeFi
The committee is also concerned about the many avenues that are available to fraudsters for them to be able to cash out pilfered digital assets.
All this comes at the same time as the FBI warned investors of potential scams on DeFi platforms. As the crypto market expands, so too will the number of bad actors looking to take advantage of vulnerable investors.