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. Furthermore, 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 addressed to Janet Yellen, the US Treasury Secretary, Gary Gensler, the US SEC Chair, and Rostin Behnam, the US CTFC Chair.
“The damage is staggering: just last year, nearly $10 billion was lost to crypto scams or stolen in hacks.”
Read more: 15 Most Common Crypto Scams To Look Out For
Crypto Investors Face Increasing Warnings
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. In particular, he explains how scammers artificially generate interest in a crypto token by asserting its real-world utility. Subsequently, after enticing investors into the scam, he reiterates that the scammers will vanish with the funds.
In particular, it pointed to the now-bankrupt crypto lender Celsius as an instance where the company misrepresented facts, ranging from the success of its fundraising to the number of its users.
In recent news, Roni Cohen-Pavon, the chief revenue officer of Celsius, admitted guilt to four fraud charges. He has pledged to cooperate with authorities in the ongoing investigation. However, former Celsius CEO Alex Mashinsky entered a plea of not guilty to fraud charges last month.
This follows the issuance of a warning by the US Federal Trade Commission (FTC) to Americans. The FTC warned that cryptos lack the same legal protections as traditional payment methods.
However, the warning carried such severity that it urged citizens not to use digital assets for payments. “No legitimate business or government agency is going to demand you pay with cryptocurrency,” it warned.
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