Inspection of top exchanges by the U.S. lawmaker

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Key points:

• U.S. Senate Finance Committee Chairman Ron Wyden has asked Binance, Coinbase, Bitfinex, Gemini, Kraken, and KuCoin to provide information on consumer protection. 
• Wyden gave the six companies until Dec. 12 to answer questions about their subsidiaries, consumer asset protection, use of customer data, and preventing market manipulation. 

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U.S. Senate Finance Committee Chairman Ron Wyden has asked six cryptocurrency firms to provide information on consumer protection following FTX’s liquidity problems and bankruptcy.

In a separate letter dated Nov. 28, Wyden targeted Binance, Coinbase, Bitfinex, Gemini, Kraken, and KuCoin, requesting information on what protections the exchanges have in place in the event of an outage like FTX’s. The senator said crypto users who have funds with FTX “have no protections like those of banks or registered brokers that are under the FDIC or the Securities Investor Protection Corporation.”

“As Congress considers much-needed regulation of the crypto industry, I will focus on the clear need for consumer protections, building on long-standing assurances to customers of banks, credit unions, and securities brokers,” Wyden said. “If these safeguards were in place before the FTX collapse, far fewer retail investors would face sudden financial losses today.”

Wyden gave the six companies until Dec. 12 to answer questions about their subsidiaries, consumer asset protection, use of customer data, and preventing market manipulation. The Senate Agriculture Committee has scheduled a Dec. 1 hearing investigating the FTX debacle, with Senators Elizabeth Warren and Sheldon Whitehouse calling on the Justice Department to possibly prosecute those involved in stock market misconduct.

In another chamber, the House Financial Services Committee will conduct a similar investigation of FTX on Dec. 13. Chairwoman Maxine Waters and senior committee member Patrick McHenry both backed the congressional action, with McHenry describing the events surrounding the failed exchange as a "dumpster fire."

FTX’s bankruptcy proceedings, currently pending in the Delaware District, reveal that the exchange may be liable to more than 1 million creditors. The next hearing in the bankruptcy proceedings is scheduled for Dec. 16.