U.S. Senator questions crypto exchanges on their user protection policies

• Six exchanges have been asked to provide information pertaining to consumer relief in the event of the company’s insolvency.
• Senator Wyden has also sought answers on the safeguards put in place in order to avoid internal conflict of interest.

Ron Wyden, the United States Senator from Oregon, has written to several crypto exchanges, seeking information regarding their efforts to protect their consumers and investors following the collapse of the Bahamas-based exchange FTX which had a catastrophic impact on the industry and left several firms crippled in its wake. 

Six crypto exchanges questioned by Senator Wyden

Senator Ron Wyden, who also happens to be the Chairman of the United States Senate Finance Committee, has written to six crypto exchanges, namely Binance US, Coinbase, Kraken, Gemini, Bitfinex, and KuCoin.

These exchanges have been asked to provide information pertaining to consumer relief in the event of the company’s insolvency.

Furthermore, the letter seeks information pertaining to the exchanges’ balance sheets and audit details related to their reserves. The letter also demands details of the steps taken by the exchanges to segregate customer assets from corporate assets.

Senator Wyden has also sought answers on the safeguards put in place in order to avoid internal conflict of interest and wash trading among other things. 

In the context of FTT’s role in FTX’s downfall, the letter asks for clarification on the amount of exchange-issued tokens that make up the exchange’s reserves. 

Senator Wyden was in the news earlier this year for his critical stance on crypto mining. He questioned multiple mining firms including Argo Blockchain about the lack of transparency in their operations which led to potential tax evasion.

Increasing heat on lawmakers

The letter by Senator Wyden comes as Washington fields inquiries into the political donations received by Democratic candidates. Critics have also questioned the government agencies’ failure to prevent such a catastrophic event, the SEC in particular.

Democratic politician Beto O’Rourke, who received $1 million from FTX for his campaign in Texas, recently revealed that he had returned the full amount. 

Fellow Democratic Senator Elizabeth Warren along with Senator Richard Durbin had recently penned a letter to bankrupt crypto exchange FTX, demanding documents and information pertaining to its business activities that led to its collapse.