US Lawmaker Queries Top Cryptocurrency Exchanges About Consumer Protection After FTX Collapse

One senator's investigation into the safeguards the companies had in place in case a collapse like FTX occurred again focused on Binance, Coinbase, Bitfinex, Gemini, Kraken, and KuCoin.

Following the liquidity problems and bankruptcy of FTX, Ron Wyden, the chairman of the Senate Finance Committee in the United States, has requested six cryptocurrency companies for information about consumer protection.

In various letters dated Nov. 28, Wyden targeted Binance, Coinbase, Bitfinex, Gemini, Kraken, and KuCoin, demanding details on the safeguards they have in place in the event of a collapse similar to the one that occurred at FTX. According to the senator, cryptocurrency users who had funds with FTX "had no such protections" as those at banks or registered brokers insured by the Securities Investor Protection Corporation or Federal Deposit Insurance Corporation.

“As Congress considers much-needed regulations for the crypto industry, I will focus on the clear need for consumer protections along the lines of the assurances that have long existed for customers of banks, credit unions and securities brokers,” said Wyden. “If these protections had been in place before the failure of FTX, far fewer retail investors would be facing precipitous financial harm today.”

By December 12, Wyden asked the six corporations to respond to questions about their subsidiary companies, the protection of client assets, the use of customer data, and measures against market manipulation. On December 1, the Senate Agriculture Committee will hold a hearing to analyze the collapse of FTX. Senators Sheldon Whitehouse and Elizabeth Warren have urged the Justice Department to consider bringing criminal charges against those responsible for misbehavior at the exchange.

On December 13, the House Financial Services Committee will hold a similar investigation hearing into FTX in the other chamber. Maxine Waters, the committee's chair, and Patrick McHenry, the committee's ranking member, have both supported the legislative action, with McHenry dubbing the events surrounding the unsuccessful exchange a "dumpster fire."

More than 1 million creditors may be held liable for FTX, according to the bankruptcy procedures taking place in the District of Delaware. The bankruptcy case's following hearing has been set for December 16.

ABOUT GAMEFI.ORG

GameFi.org is a one-stop destination for web3 gaming. We aim to build digital communities and manage virtual economies for mainstream adoption. GameFi.org offers a suite of solutions covering the entire games and gamified projects' lifecycle, following a vision of one digital platform, and one virtual identity requiring zero blockchain knowledge. Visit https://gamefi.org/ for more information.

Twitter | Telegram Channel | Main Chat | Discord | Facebook | LinkedIn | YouTube