US FTC Investigating Several Crypto Firms Over 'Possible Misconduct' Concerning Digital Assets

The FTC has also pursued companies that presented themselves as cryptocurrency-related firms but which were allegedly nothing more than scams.

By Reuters | Updated: 6 December 2022 14:08 IST

US FTC Investigating Several Crypto Firms Over 'Possible Misconduct' Concerning Digital Assets

Photo Credit: Unsplash/ Bermix Studio

The SEC has cracked down on celebrity endorsements

Highlights

Bitcoin hit a record high of $69,000 in November 2021
The collapse of FTX increased pressure on the crypto industry
The Federal Trade Commission spokesperson declined to name the firms

A US agency that probes allegations of deceptive conduct confirmed on Monday that it had investigations open into several cryptocurrency firms for "possible misconduct." The Federal Trade Commission spokesperson declined to name the firms or say precisely what actions prompted the investigations.

"While we can't comment on current events in the crypto markets or the details of any ongoing investigations, we are investigating several firms for possible misconduct concerning digital assets," the spokesperson said in a statement.

Bloomberg said in a report that the investigation was linked to misleading advertising but the FTC spokesperson declined to confirm this.

KuCoin to Conduct Proof-of-Reserve Verification Post FTX Fiasco

The spectacular implosion of FTX recently sent fresh shock waves through the cryptocurrency industry, with the value of Bitcoin down sharply this year.

The Securities and Exchange Commission, which also has regulations mandating disclosures from individuals promoting securities, has cracked down on celebrity endorsements, including reality TV star Kim Kardashian on allegations of promoting a crypto token on her Instagram account without proper disclosure that she had been paid.

The FTC has also pursued companies that presented themselves as cryptocurrency-related firms but which were allegedly nothing more than scams.

Genesis Owes Gemini Crypto Exchange $900 Million After FTX Collapse: Report

Back in June, the FTC said in a report that more than 46,000 people reported losing over $1 billion (roughly Rs. 8,233 crore) in cryptocurrency scams since the start of 2021.

Nearly half the people who reported losing digital currencies in a scam said it started with an ad, post or a message on a social media platform, according to the FTC.

The craze for cryptocurrencies was at a fever pitch last year with Bitcoin hitting a record high of $69,000 (roughly Rs. 56 lakh) in November 2021.

Nearly four out of every ten dollars lost in a fraud originating on social media was lost in crypto, far more than any other payment method, with Instagram, Facebook, WhatsApp and Telegram being the top social media platforms in such cases, according to the FTC's report.

Will crypto tax hurt the industry in India? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

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