The US Senate Finance Committee, has requested details from six crypto firms on consumer protection
US lawmakers are questioning major cryptocurrency exchanges on the issue of consumer protection amid the disappearance of Japanese exchange FTX. The Tokyo-based firm’s website is now offline, and a number of its former investors are reporting that they have been unable to access their funds since the company’s collapse.
Representative Brad Sherman (D-CA) is among those who have expressed concern about the situation. In an interview with CNBC yesterday, Sherman said: “I think we need to be vigilant about this type of activity.” He added that he wants to know what happened at FTX, and whether investors will be able to get their money back.
The Securities and Exchange Commission has also issued a statement on the matter: “The SEC is committed to ensuring that all investors are protected from fraud or other unlawful acts in connection with digital assets.”
In addition to Sherman, Democratic Senator Sherrod Brown (D-OH) has called for a hearing with cryptocurrency exchanges over their policies on security and transparency.
According to Mr. Pallone, who represents New Jersey’s 6th Congressional District, it is imperative that crypto exchanges take steps to ensure that investors are not exploited during such events.
“We have a responsibility as legislators to ensure that investors are protected and that they are not being taken advantage of,” said Mr. Pallone in a press release sent to media outlets by his office on Wednesday. “It is up to all of us—users, traders and exchanges—to help protect our customers from fraudsters.”
Mr. Pallone also noted that he would be seeking more information from exchanges about their policies for dealing with potential fraudsters during such events in the future.
“The theft of $5 million in crypto from [FTX] was a direct result of the lack of consumer protections offered by these platforms,” said Rep. Ron DeSantis (R-FL), who has been outspoken about his concerns over the lack of consumer protections offered by cryptocurrency exchanges. “Without such protections, we are left with nothing but a free-for-all where criminals can steal millions from innocent investors with minimal risk.”
DeSantis’ comments come after FTX collapsed earlier this week due to what it claims were fraudulent activity on its platform. The company said that there were more than 1 million phishing emails sent out by hackers seeking to steal user information, which could have led directly to the theft of $5 million worth of cryptocurrency (Bitcoin and Ethereum).
In a letter to the United States Securities and Exchange Commission, a group of US lawmakers are demanding that major cryptocurrency exchanges provide more information about their customer protection measures. The letter comes as the founders of FTX, a cryptocurrency exchange with operations in the Philippines, are seeking damages from the exchange’s collapse.
The FTX founders say they were unable to pay back creditors after their reputation was damaged by hackers who stole $2M worth of cryptocurrencies from their wallets. The exchange declared bankruptcy in January 2018.