To rebuild customer trust, the cryptocurrency industry needs to take action.
Submitted by Charley Cooper, Managing Director, R3, and former Chief Operating Officer of the Commodity Futures Trading Commission, New York, NY, US
An alleged fraudulent cryptocurrency pyramid scheme was uncovered by the SEC at a poor moment for investors and an even worse time for the cryptocurrency market ("SEC charges 11 in'massive' crypto Ponzi scheme", Report, August 2.
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It's important to remember that fraud is a problem in many sectors of society and that dishonest actors can be found everywhere.
It has never been more crucial for crypto to start putting more severe consumer safeguards in place, though, given the increased scrutiny it has faced in the wake of the market crash earlier this year.
Consumer and regulatory ramifications will result from not doing this.
Although the hundreds of millions of dollars that were stolen through this pyramid scam are terrible from the perspective of the consumer, we shouldn't base our judgment of this kind of fraud solely on statistics.
The promise of high profits has misled real people, who have lost a lot of money and experienced real suffering as a result. The industry must accept responsibility for enacting policies that will increase protection, education, and transparency.
Lack of such safeguards will result in the heavy-handed regulation we have long warned the business of: regulation that may potentially hinder innovation.
The SEC has made it plain that it is willing to use enforcement measures to control the cryptocurrency market if necessary.
Cryptocurrency needs to take action right away to show the honesty required to earn back the faith of authorities and consumers alike if it wants to avoid harsh policing.
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