On August 30, a subcommittee of the U.S. House oversight committee on economic and consumer policy demanded answers from regulators on how to control cryptocurrency scams.
The committee, led by Illinois’ 8th Congressional District congressman 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. The letter was also sent to cryptocurrency trading platforms such as Coinbase, FTX, Binance.US, Kraken and KuCoin asking for an explanation of the measures taken to curb scams and scams in this area.
“As stories of skyrocketing prices and overnight wealth have attracted both professional and amateur investors to cryptocurrencies, this is an opportunity for scammers already.”
“The lack of watchdogs to warn against suspicious transactions and the limited understanding of many consumers and investors about the underlying technology make cryptocurrencies a preferred space for scammers.”
Cryptocurrency misuse, fraud, and scams
The congressman in his letter also stated that the federal government has taken no action in blocking plans to target the cryptocurrency market, including after the Federal Trade Commission reported that about $1 billion was lost in cryptocurrency scams this year. The FTC study also highlighted that in 2021, $575 million in all losses due to cryptocurrency fraud involved bogus investment opportunities.
Krishnamoorthi wrote in his letter that:
“Without clear definitions and guidelines, agencies will continue infighting and will not be able to effectively implement measures to protect consumers and investors of cryptocurrencies and exchanges.”
Krishnamoorthi is awaiting responses to his request. On September 12, he took to Twitter to announce that he was seeking input from stakeholders. This attracts a lot of interest from the victims of cryptocurrency scams.
Similar concerns for DeFi
The commission is also concerned about opportunities for scammers to make money from stolen digital assets.
All this happened at the same time as the FBI warned investors about potential scams on the DeFi platform. As the cryptocurrency market expands, the number of bad actors seeking to profit and of course the number of victims will also increase.
