Letter: The cryptocurrency industry must take action to regain consumer confidence

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The SEC’s discovery of an allegedly fraudulent cryptocurrency pyramid scheme comes at a bad time for investors and an even worse time for the cryptocurrency industry (“SEC 11 charge in ‘massive’ Ponzi scheme,” Report, Aug.2 ).

It should be noted that bad actors exist in all industries and fraud is not unique to cryptocurrencies.

However, given the intense scrutiny cryptocurrency faced following the market downturn earlier this year, it has never been more important for cryptocurrency to start implementing stricter safeguards for consumers.

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Failure to comply with this precaution will have consequences for consumers and regulation.

From a consumer perspective, the hundreds of millions stolen through this pyramid scheme are shocking, but our perception of this type of fraudulent activity shouldn’t be based on numbers alone.

Real people have been misled by the promise of big gains and have lost huge sums of money, causing very real pain. Industry must take responsibility for introducing measures that establish greater transparency, education and protection.

If not, what we have long warned the industry against will occur: heavy regulation that could potentially stifle innovation.

The SEC has clearly shown its muscles, signaling to crypto that it can control the industry through law enforcement if needed.

If cryptography is to avoid brutal crackdowns, it must act now to demonstrate the integrity needed to regain the trust of consumers and regulators.

Charley Cooper
Chief Executive Officer, R3
Former Director of Operations at the Commodity Futures Trading Commission
New York, New York, United States

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