ICYMI: At Hearing, Experts Agree with Warren that Stablecoins and Crypto Pose Threats to American Consumers

Hearing

So, cyber criminals are exploiting cryptocurrency to scam American consumers out of billions of dollars every year. According to the FBI, Americans are reporting losing more money to crypto-related investment fraud than any other kind of investment scam.

In 2022, that amounted to reported losses of more than two and a half billion dollars, and that was up 183% in just one year. Now, according to the Federal Trade Commission, since 2021, crypto has accounted for about one in every four dollars that consumers report losing to fraudulent schemes. More than any other payment method out there.

So let's focus today on one type of cryptocurrency, stablecoins. Stablecoins, like Tether and USDC, supposedly pegged to the dollar or other assets that are relatively stable, and this is supposed to make stablecoins safer and less volatile than other tokens, kind of the responsible big brother of crypto.

But new data show that stablecoins are now used in the majority of illicit crypto transactions, especially in the scams. Last year, more than 70% of the crypto scams that we know about involved stablecoins. So, Ms. Sanchez-Adams, as a consumer protection expert, does it surprise you that stablecoins are increasingly being used to scam customers?

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All right, so crypto scams, as you know, take a variety of different kinds of forms. “Pig butchering”, a kind of romance scam, where criminals build up a personal relationship with their targets online, and then convince them to invest money in fake crypto platforms before stealing the money.

Many of these scams are perpetrated by sophisticated criminal organizations based in Asia, including North Korea. Mr. Benda, you are an expert on cybersecurity. What is it about crypto that makes it such a good tool to scam people out of their money?

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Wow, it’s a lot to be able to hide. You know, we can't keep making it easy for criminals and for countries like North Korea to defraud Americans out of their hard-earned money.

20 senators, both Democrats and Republicans are sponsoring the Digital Asset Anti-Money Laundering Act. This bill would plug the holes in our anti-money laundering rules to make it easier for financial regulators to track suspicious crypto activity to make it more visible, and to shut down the scammers.

So Mr. Breyault, your organization, the National Consumers League, has been protecting consumers for over 100 years. Would this bill help protect American consumers from crypto fraud?

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Want to say a word more?

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Well thank you, Mr. Breyault. And thank you to the National Consumers League. We are very grateful to have your endorsement, from your organization. I also want to say thank you to the National Consumer Law Center, Ms. Sanchez-Adams.

Our bill will help protect consumers and protect our national security and I look forward to working with my colleagues on this committee so that we can get it passed. Thank you

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