AG James Submits Testimony to Senate Calling for Stronger Laws on Cryptocurrency Platforms to Shield Shoppers and Traders
New York Attorney General Letitia James referred to as on Congress to implement stronger rules on the cryptocurrency market to defend shoppers and traders from scams. In written testimony delivered to the Senate Committee on Homeland Security and Governmental Affairs’ Permanent Subcommittee on Investigations, Attorney General James particulars the flood of cryptocurrency scams costing Individuals billions of {dollars} yearly. Attorney General James additionally describes how the Digital Asset Market Readability Act (Readability Act) would limit state and native legislation enforcement, making it tougher for the Workplace of the Attorney General (OAG) to proceed its nation-leading efforts to crack down on cryptocurrency scams and maintain platforms that violate the legislation accountable.
“My workplace has been main the battle in opposition to cryptocurrency fraud,” testified Attorney General James. “Our rules-based market system provides folks confidence that they will do enterprise right here. With out satisfactory legal guidelines and rules, monetary crises ensue. We urge Congress to safeguard our monetary markets and defend America’s traders, their future, our economic system, and nationwide safety.”
Attorney General James’ testimony comes as Congress is contemplating the Readability Act, which might give oversight of digital belongings to the Commodity Futures Buying and selling Fee and override state regulation of digital markets. Attorney General James testifies that this could severely undermine the flexibility of states to defend their residents from scams. In New York alone, complaints to OAG about cryptocurrency scams have tripled during the last three years. Prior to now 5 years, cryptocurrency rip-off losses reported to the OAG totaled practically half a billion {dollars}, whereas traders misplaced billions extra due to the bankruptcies of varied cryptocurrency firms.
The OAG has led the nation in holding cryptocurrency firms accountable for failing to defend traders from scams. In 2021, OAG brought the first and only enforcement action against the largest stablecoin issuer, Tether, for recklessly and unlawfully protecting up huge monetary losses from traders. The OAG has secured tens of hundreds of thousands of {dollars} in refunds and fines from main cryptocurrency brokers that violated New York legislation or failed to defend traders from scams, together with Coin Café, Gemini and Genesis, and KuCoin.
Within the written testimony submitted at this time, Attorney General James calls on Congress to enhance transparency in cryptocurrency markets to defend Individuals from scams and forestall the funding of criminals, cartels, and international enemies. Attorney General James asserts that this elevated transparency can be vital to the integrity of America’s democracy. The truth that cryptocurrency transactions can’t be traced to a person makes it not possible to know whether or not elected officers’ monetary disclosures are correct, whether or not bribes are being paid or obtained, or whether or not elected officers are appearing in the perfect pursuits of the American public.
This anonymity additionally obscures violations of the Structure’s emoluments clause, which prohibits monetary presents from international actors, and additional undermines enforcement of present federal conflicts-of-interest and marketing campaign finance legal guidelines. Attorney General James urges Congress to ban elected officers and people who just lately served in authorities from any involvement in regulating cryptocurrency to guarantee they’re overseeing an trade from which they could be profiting. Attorney General James urges Congress to as an alternative move a cryptocurrency invoice that might:
- Require cryptocurrency platforms to adjust to anti-money laundering legal guidelines, know-your-customer rules, and cybersecurity protocols to forestall the use of cryptocurrency to finance terrorism, adversarial regimes, and crime.
- Require a closed-loop market so noncompliant establishments, firms, and international locations can not take part.
- Prohibit cryptocurrency that can’t be absolutely traced, corresponding to these going by way of cash laundering mixers, from being transformed to U.S. {dollars}.
- Not exempt cryptocurrency from present cash transmission, commodities, and securities legal guidelines.
- Require cryptocurrency platforms to have interaction in surveillance to establish anomalous patterns, chase away manipulation, and find dangerous actors.
- Require platforms and intermediaries to defend Individuals from fraud and scams and maintain cryptocurrency firms financially answerable for failing to accomplish that, related to the Digital Funds Switch Act.
Attorney General James is a nationwide chief in defending traders and holding cryptocurrency firms accountable. In April 2026, Attorney General James secured over $5 million from cryptocurrency platform Uphold for promoting a fraudulent investment scheme. In July 2025, Attorney General James took motion to stop a crypto scam targeting Russian-speaking New Yorkers. In January 2025, Attorney General James became the first regulator to provide notice of litigation by depositing a nonfungible token (NFT) into the wallets scammers used to steal the victims’ cryptocurrency. In June 2024, Attorney General James sued cryptocurrency trading company NovaTechFx for engaging in an illegal pyramid scheme that defrauded a whole bunch of hundreds of traders worldwide, together with over 11,000 New Yorkers, of over a billion {dollars}’ price of cryptocurrency.
