United States Senator Sherrod Brown voiced his concerns regarding the absence of customer-facing disclosures from cryptocurrency companies, highlighting the rising number of crypto scams.
“As they examine crypto tokens, consumers and investors need to be able to assess risks, avoid fraud, and understand conflicts of interest,” Brown stated in a recent letter.
Improving Disclosures Will Reduce Crypto Scams
Brown advocates for more “consistent, comprehensive, and accurate” disclosures within the crypto industry. He explains that without such measures, investors and consumers remain exposed to vulnerabilities.
In a letter dated September 14th, he outlined the significant financial losses suffered by crypto investors over the past year. He attributes this to the absence of regulatory transparency.
The letter was sent to US Treasury Secretary Janet Yellen, US SEC Chair Gary Gensler, and CTFC Chair Rostin Behnam.
“The damage is staggering: just last year, nearly $10 billion was lost to crypto scams or stolen in hacks.”
Brown emphasizes the necessity of taking additional measures to safeguard crypto users. “We must do more to protect crypto users from this misconduct and begin to improve available data and documentation,” he states.
Brown illustrates the common rug pull scam as an example. He explains how scammers artificially generate interest in a crypto token by asserting its real-world utility. After enticing investors into the scam, he reiterates that the scammers will vanish with the funds.
This follows the issuance of a warning by the US Federal Trade Commission (FTC) to Americans. The FTC warned them that cryptos lack the same legal protections as traditional payment methods.
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