All Binance U.S. Consumer Safety Files to Be Reviewed by U.S. Congressman

Crypto Regulation
All Binance U.S. Consumer Safety Files to Be Reviewed by U.S. Congressman

A Subcommittee chairperson contacted the CEO of Binance U.S. to request several documents to assess the steps taken to safeguard shareholders. The Panel made an unprecedented request for official paperwork demonstrating the firm’s compliance with several investor-centric safety procedures in a mail to Brian Shroder, president and CEO of Binance U.S. The U.S. House Committee on Oversight and Government Reform’s subcommittee chairman issued the request.

The Congressman’s Scepticism

Congressman Raja Krishnamoorthi of the Subcommittee on Economic and Consumer Policy emphasised in the letter to Shroder the absence of support from cryptocurrency firms in assisting the US government in reducing fraudulent financial activities and safeguarding investors, stating:

“The exponential development of theft and client exploitation worries me. The apparent inaction on the part of bitcoin exchanges to safeguard users making transactions on their systems also worries me.”

Krishnamoorthi expressed doubt about the verification method used to list tokens on cryptocurrency exchanges, which generates higher risks for investors. The Subcommittee contacted Binance, a subsidiary of the largest cryptocurrency exchange Binance, to request numerous papers to assess the breadth of their previously indicated fears.

Submission of Documents For Validation

A deadline of fewer than two weeks has been issued for Binance US to submit all the documentation that has been required since it started operating.

Krishnamoorthi reaffirmed in his remarks on behalf of the US Congress that cryptocurrency exchanges must create steps to safeguard investor safety “By enacting audit policies, demanding certain disclosures, deregistration, and establishing other security measures.”

Shroder has also been asked to respond to inquiries about the methods and tools used by the platform to lower risks, fraud, and schemes.

According to a recent survey, 46% of adult cryptocurrency users in the US experienced financial losses because of the current crypto winter. In search of a “new method to invest,” most respondents explored dealing in cryptocurrencies and said it was an “excellent way to gain revenue.”

Other Exchanges Were Not Left Out

The letters also request information and records from Coinbase, FTX, Kraken, and KuCoin regarding what, if anything, companies are doing to protect customers from fraudulent activities and scams involving cryptocurrencies.

The letters specifically demand that the firms turn over records going back to January 1, 2009, showing efforts to fight cryptocurrency fraud and Ponzi schemes, as well as efforts to “distinguish, start investigating, and eliminate or flag possible fraudulent virtual currencies or accounts,” and highlighting discussions about “whether to embrace more restrictive rules.”

The panel writes that “although some platforms analyze cryptocurrency before publishing them, others allow virtual assets to be published with little or no screening” in a letter to Sam Bankman-Fried, the CEO of FTX.

According to blockchain analytics company Chainalysis, “rug pulls,” a technique in which producers put a token on an exchange, inflate its value, and then flee with the proceeds, accounted for 37% of cryptocurrency scam income in 2018.