US Senator questions key crypto players

One senator is now looking into the safeguards that Binance, Coinbase, Bitfinex, Gemini, Kraken, and KuCoin had in place in the event that another disaster like FTX occurred.

Following the liquidity problems and bankruptcy of FTX, Ron Wyden, the chairman of the Senate Finance Committee in the United States, has asked six cryptocurrency companies for information about consumer protection.

In unique letters dated Nov. 28, Wyden singled out Binance, Coinbase, Bitfinex, Gemini, Kraken, and KuCoin, asking them for details on the safeguards they have in place in the event of a breakdown similar to the one that occurred at FTX. The senator claimed that FTX customers who held cryptocurrency funds had “no such protections” as customers of banks or licensed brokers covered by the Securities Investor Protection Corporation or Federal Deposit Insurance Corporation.

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

By December 12, Wyden has requested and expects to get a response from the six corporations to questions about their subsidiary companies, the protection of client assets, the use of customer data, and measures against market manipulation. On December 1, the Senate Agriculture Committee will hold a hearing to discuss the collapse of FTX. Senators Sheldon Whitehouse and Elizabeth Warren have urged the Justice Department to consider bringing criminal charges against those responsible for any malpractice at the exchange.

On December 13, the House Financial Services Committee will hold a similar inquiry hearing into FTX in the other chamber. Maxine Waters, the committee’s chair, and Patrick McHenry, the committee’s ranking member, have both endorsed the legislative action, with McHenry dubbing the circumstances surrounding the unsuccessful exchange a “dumpster fire.”

The District of Delaware is now conducting FTX’s bankruptcy proceedings, which have shown the exchange may owe more than 1 million creditors money. The bankruptcy case’s subsequent hearing has been set for December 16.