Binance, Coinbase Among Crypto Firms Questioned by US Senator After FTX Mess

Ron Wyden, chairman of the Senate Finance Committee, sent letters to crypto companies demanding answers about their consumer protection practices.

AccessTimeIconNov 29, 2022 at 7:46 p.m. UTC
Updated Dec 1, 2022 at 5:57 p.m. UTC
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Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.

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Binance.US and Coinbase (COIN) are on a list of crypto companies questioned this week by the chairman of the U.S. Senate Finance Committee about how they protect the investors using their services in light of the widespread damage caused by the fall of FTX.

Sen. Ron Wyden (D-Ore.) sent letters to six CEOs of prominent cryptocurrency firms – including Bitfinex, Gemini, Kraken and KuCoin – asking them to explain their structures, whether they separate customers’ assets from their own and how they guard against market manipulation and internal conflicts of interest.

“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,” Wyden said in the letters. “If these protections had been in place before the failure of FTX, far fewer retail investors would be facing precipitous financial harm today.”

The letters – dated Nov. 28 – request balance-sheet information and explanations for the companies’ reserves, including whether they’re audited. While it’s unlikely the companies – most of them private and a couple of them based overseas – will provide detailed financial data, the requests underline Democratic lawmakers’ possible approach to the industry as the next session of Congress gets rolling in about a month.

Sens. Elizabeth Warren (D-Mass.), Sheldon Whitehouse (D-R.I.) and Richard Durbin (D-Ill.) have begun probing FTX, calling for those responsible to be held accountable for their roles in the crypto exchange’s collapse.

Wyden’s committee isn’t core to some of the central regulatory questions facing the industry in the U.S., but his authority over tax issues could play an important part. The Oregon senator had previously been critical of crypto miners, although he’d also pushed for crypto-friendly changes to the 2021 infrastructure bill that shook the industry.

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Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.


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Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.