US Lawmaker Interrogates Binance, Coinbase and Other Exchanges on Consumer Protection

Following the collapse of FTX exchange coupled with the reverberating effects on the customers, United States lawmaker Ron Wyden has interrogated leading crypto exchanges like Binance, Coinbase, Kucoin, among others over customer protection.

Consumers who entrusted their assets to firms like @FTX_Official are discovering they have no protections when companies go bust. As Congress considers much-needed regulations for the crypto industry, I am laser-focused on ensuring real protections for consumers. https://t.co/QRdSUKe0A3

— Ron Wyden (@RonWyden) November 29, 2022

Wyden, chair for the United States Senate Finance Committee, has asked crypto exchanges to provide detailed explanation on their plans for customers in case the indiscriminate FTX collapse surfaced again.

The question was posed to six cryptocurrency companies after finding that FTX customers had been left with their funds stuck inside the platform.

Wyden asserted that centralized exchange (CEX) users do not have protection like banks or registered brokers under the Federal Deposit Insurance Corporation, and it is time to put measures in place.

While the US Congress has expressed readiness to map out regulations for the crypto industry, Wyden emphasized that he is more concerned about consumer protection.

He justified that if those protective measures had been in place, a lot of retail investors would have been spared of the calamitous effects of FTX collapse.

Frameworks on Crypto Regulations

Now more than ever, lawmakers are moving to institute legal frameworks to regulate crypto. Notably, the Senate Agriculture Committee has set December 12 as a hearing date on the FTX collapse.

News: On December 1 @SenateAgDems + @SenateAgGOP will hold a hearing about the FTX collapse and the need for congressional action.

— Senate Ag, Nutrition, & Forestry Committee Dems (@SenateAgDems) November 21, 2022

In the same vein, Senators Elizabeth Warren and Sheldon Whitehouse have urged the Justice Department to ensure that anyone indicted in the events that led to the collapse of FTX should be prosecuted accordingly.

Following the fall of FTX, the urgent need for legislation has never been greater. @FSCDems anticipated this need & have already been working for several months under the leadership of Chairwoman Waters, w/ RM McHenry, to craft bipartisan legislation.

📺: https://t.co/RyttaaSqX7

— U.S. House Committee on Financial Services (@FSCDems) November 16, 2022

Amidst efforts by the two legislative houses to uncover the mystery that led to the fall of FTX, the exchange bankruptcy proceeding is in progress at the United States federal court in Delaware, where FTX US is located.

Given the fact that many blockchain firms and investment agencies have suffered the ripple effects of FTX imbroglio, laws that will guarantee transparency and fairness in the crypto space should be institutionalized.