InfoBytes Blog
Senator launches inquiry into crypto exchanges’ consumer protection measures
On November 28, Senator Ron Wyden (D-OR) sent letters to the six largest cryptocurrency exchanges requesting information about their finances, internal controls, and how customers’ funds are used. The inquiry follows the recent bankruptcy of a major crypto exchange accused of engaging in widespread mismanagement and misusing customers’ funds. Wyden asked the exchanges to respond to a series of questions related to, among other things, (i) the number of subsidiaries that fall under an exchange’s umbrella; (ii) whether customer assets are segregated from corporate or institutional assets; (iii) the treatment of customers’ funds; (iv) safeguards for preventing market manipulation; (v) the use of customer data for proprietary trading purposes; (vi) debt-to-asset and debt-to equity ratios, balance sheets, reserves, and audit procedures; (vii) insurance coverage; and (viii) steps taken by the exchanges to work with other crypto companies to develop protections for investors and customers. Senator Wyden further announced, “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.”