The Federal Trade Commission says crypto scammers have defrauded Americans of $1 billion since 2021. Cheddar News speaks with David Maria, Head of Litigation and Regulatory Affairs at Bittrex about how crypto scams work and what consumers can do to protect themselves.

Closing Bell

Who Is to Blame for Crypto Scams?

Well, crypto scammers have defrauded Americans of more than a billion dollars just since the start of 2021 according to the Federal Trade Commission, more than any other payment method and now a consumer watchdog within the US House of Representatives is stepping in acknowledging the massive problem that of the economic and consumer policy subcommittee sent a letter to four government agencies and five of the biggest Cryptocurrency exchanges saying that he is concerned and asked what they're doing to stop crypto fraud and other scams. Well, joining me now is David Maria, head of litigation and regulatory affairs at bit rex a Cryptocurrency exchange, David, it's great to have you on the show how big of a problem is fraud in the Cryptocurrency space from your perspective. Hey Kristen good to be back. So in reading the report, right, So the article is based on the FTC's report. And one thing to distinguish here is this isn't fraud caused by crypto Cryptocurrency or crypto exchanges, the report makes clear that these are traditional scams through social media sites and now, instead of using cash or a bank account getting someone's bank number is the way to fund them. They're moving towards Cryptocurrency. So it isn't an inherent problem with Cryptocurrency, it's it's the same old thing with scammers finding a new way to do it and finding a new means of currency. Okay so what do consumers need to know, David, how might they be targeted on a platform like social media. So I think in terms of that, it's it's like anything else. Don't give out your personal information, Don't invest in something without researching it. Don't send money to someone you don't know, don't click on links that you don't know who they're from. And more importantly, if you're going to get into Cryptocurrency, do it through a reputable site, a reputable exchange that that takes precautions to make sure they know who their customers are and what the transactions are going to be on their sites. A billion dollars since the start of 2021. Do you agree with those numbers? Or do you think it might even be exceeding that billion dollar mark in terms of the money that we've seen fraud id via Cryptocurrency? I mean, I don't have a basis to agree or disagree with it. It sounded like a pretty comprehensive study by the FTC. But again, you know, they make it sound as though it's cryptocurrencies. That is the problem here. It's the age old problem of people scamming other people and the people who are getting taken not really doing their diligence. This isn't an inherent problem to Cryptocurrency. What do you think is the best way for regulators to try to get a hold of this? David to stop the fraud that will continue to see among Cryptocurrency. Well, I mean, I think finding a regime where there is a single regulator and and a set path for regulation as well as clarity in terms of how crypto and crypto exchanges are going to be regulated right now. It's not clear there's most crypto exchanges are regulated by the states where they do business as well as Treasury as money service businesses. But the SCC is involved. C F t c f T c D some extent. And obviously doj from an overarching standpoint, really just figuring out who's going to regulate it and having them take over benefits. The exchanges. And ultimately, investors. Are there other ways, David, we discussed social media, you mentioned it that people are being targeted via some of these scams. Are there other ways that you're seeing people being targeted with the Cryptocurrency scam demanding Cryptocurrency, for instance, or stealing money via Cryptocurrency? No, I I mean the scams are the scams right? It's just as I said before, crypto is just one way that it can fund them. It's still done the same way where people give over their bank account and you know, it's not the bank's fault in that regard. We see other things here, A lot of it is just protecting your personal information, protecting your log ons. Whether it's to your, you know, Cryptocurrency exchange, your bank account, your email hackers find a way to get in people's emails and find their passwords because people email those things. So if the customers, consumers themselves are careful and and you know, make sure they don't do these careless things. That's really the first line of defense and that would prevent the vast majority of these types of scams from a litigation standpoint, David, as the head of litigation at your company that you work at? Bit rex? What are the challenges for you in litigating some of these cases? Well, I mean, obviously we have outside counsel involved in a lot of this and I don't really discuss the specifics of things that we do in that realm. But it's the same thing. It's it's the challenges of looking at where the problem occurred and and if it's on the customer end, it's it's more difficult. I mean, Beatrix runs a very secure exchange. We make sure that that anything that happens on our exchange has the highest levels of security. So we're confident that we have that if there are issues a lot of times, as I mentioned, it happens on the outside where customers credentials are compromised and and we have to deal with that from, you know, showing them that there wasn't a fault on our end. But also trying to have a positive customer service aspect with regard to them. Alright. David, Maria, head of litigation and regulatory affairs at rex A Cryptocurrency exchange. David, thanks again for joining