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Cryptocurrency fraud prevention: House panel calls on regulators to explain how they’re protecting consumers

Lawmakers on Capitol Hill are looking into what is being done to prevent cryptocurrency fraud.

A House oversight subcommittee asked regulators and industry leaders to explain what they are doing to stop it along with other scams against consumers.

The issue was brought up by Illinois Rep. Raja Krishnamoorthi, head of the Economic and Consumer Policy subcommittee.

He asked leaders of the Treasury Department, Securities and Exchange Commission, Commodity Futures Trading Commission, and Federal Trade Commission for more information on the steps they are taking to curb consumer abuse linked to cryptocurrencies.

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Photo of Rep. Raja Krishnamoorthi speaking

Rep. Raja Krishnamoorthi, D-Ill., head of the Economic and Consumer Policy subcommittee, on Aug. 30, asked leaders of the Treasury Department, Securities and Exchange Commission, Commodity Futures Trading Commission, and Federal Trade Commission for (AP Photo/Mariam Zuhaib, File / AP Newsroom)

Five of the biggest cryptocurrency exchanges were also sent inquiry letters, requesting documents on company policies regarding the removal of fake accounts.

This move follows Monday’s warnings from the Federal Bureau of Investigation that criminals are more frequently exploiting vulnerabilities on certain decentralized finance platforms to steal cryptocurrency.

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It has been a rough year for cryptocurrencies. There has been tremendous volatility during which bitcoin has lost nearly half its value and other cryptocurrencies even more.

“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,” reads one letter addressed to Treasury Secretary Janet Yellen.

Bitcoin, ethereum and dogecoing in a photo illustration

Illustration of various cryptocurrencies (iStock / iStock)

A report on the impacts of cryptocurrencies and other digital assets on financial markets and illicit finance is expected to be released in the coming weeks.

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In March, President Biden issued an executive order calling for several agencies to look at ways to regulate digital assets and gave them 180 days to do so.

The Associated Press contributed to this report.

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