Senate Finance Committee Chair Ron Wyden, D-Ore., wants information on how large crypto exchanges conduct business, including whether they use customer funds for undisclosed purposes, following the collapse of FTX.
The Oregon Democrat and chair of the powerful tax policy committee also wants details of the assets on the balance sheets of Binance.US, Coinbase, Bitfinex, Gemini, Kraken, and Kucoin, how many corporate entities they have, and how funds are segregated between those entities. He's pursuing the information as part of an effort to draft legislation to enhance consumer protection for crypto customers.
In letters sent to those exchanges, Wyden also asked for more information on their accounting, anti-money laundering compliance, and controls against digital asset market manipulation.
“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 statement, noting that customer accounts with digital asset trading firms do not enjoy the same federal insurance extended to bank accounts.
"If these protections had been in place before the failure of FTX, far fewer retail investors would be facing precipitous financial harm today,” he added.
Customers for the bankrupt offshore trading firm, its U.S. subsidiary, and other affiliates face a lengthy process to recover any portion of their funds — which will likely be pennies on the dollar.
On Monday, crypto lender BlockFi became the latest digital asset company to declare bankruptcy, its financial situation exacerbated by FTX's own collapse. The pair join a growing roster of cryptocurrency-related bankruptcy cases this year.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.