A panel of House members in the United States Congress is pressing cryptocurrency leaders to discuss what they’re planning to do to protect potential crypto investors from falling victim to fraud and scams.
How Can Crypto Keep People Safe?
One of the big problems associated with running an unregulated industry like crypto is the fact that there are virtually no rules, and there are practically no governing bodies that can get in the way of things going wrong or people losing their money. As a result, while the notions of crypto have certainly been taken to heart (everyone enjoys financial independence), there are usually few punishments dished out to those who seek to engage in illicit behavior.
Some of the biggest examples of crypto fraud have occurred within the walls of digital currency exchanges like Mt. Gox and Coincheck. Both took place in the nation of Japan roughly four years apart, with Mt. Gox occurring in February of 2014 and Coincheck happening in January of 2018. Together, the exchanges lost a total of $1 billion, and very little of that money has ever been recovered or given back to the people who lost it.
In addition, financial regulators in Japan have since had a hand in overseeing the crypto space. With two of the biggest digital currency embarrassments under their belts, regulators are likely looking to take a stand to ensure things like this never happen again.
Now, the United States is following suit, and lawmakers are eager to ensure all crypto traders are never subjected to similar situations. At the head of the issue is Illinois representative Raja Krishnamoorthi, who leads the Economic and Consumer Policy subcommittee. He has sent letters out to at least five leading digital currency exchanges. These letters are requesting documents regarding the companies’ policies and how they deal with the removal of fake accounts.
Furthermore, Raja is going after the heads of leading financial agencies such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). He is specifically requesting to know what they do to ensure traders remain safe and how they plan on ending abuses stemming from the crypto space.
Scams Down, Hackings Up
Treasury Secretary Janet Yellen explained in a recent interview:
Despite these vulnerabilities, the federal government has been slow to curb cryptocurrency scams and fraud. Existing federal regulations do not comprehensively or clearly cover cryptocurrencies under all circumstances.
Not long ago, cryptocurrency and blockchain analysis firm Chainalysis released a report claiming that while crypto scams have taken a dive in the recent crash, hackings are more common than ever. Among the most recent examples brought up by the document are a $190 million hack of the popular digital currency exchange Nomad and $5 million stolen from various Solana wallets.
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