Sam Bankman-Fried calls for tougher regulations to tackle crypto hacks – Markets Insider

  • Sam Bankman-Fried has called for more federal oversight of the crypto industry, after a number of high-profile hacks and scams.
  • He said those launching coins or projects should have to follow tougher disclosure and anti-fraud rules.
  • His comments came after a couple were arrested for alleged money laundering in connection to a $4.5 billion hack on the Bitfinex exchange in 2016.

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Crypto billionaire Sam Bankman-Fried has called for more government regulation in the US digital asset sector to prevent scams, hacks and “pump-and-dump” schemes.

His comments came a day after the Department of Justice said it had seized $3.6 billion and arrested a couple over an alleged money-laundering scheme linked to the 2016 hack of crypto exchange Bitfinex, in which bitcoin now worth $4.5 billion was stolen.

Crypto companies should be subject to tougher cybersecurity and anti-hacking rules, Bankman-Fried told the Senate Agriculture Committee on Wednesday. The 29-year-old co-founded the giant crypto exchange FTX in 2019.

Asked about a number of recent high-profile hacks and scams, he said: “I think what this highlights is the need for Federal oversight of the cryptocurrency industry. There have been a number of hacks and scams, historically most of this has happened on unregulated venues.”

The FTX CEO also said he was concerned about “scams, Ponzi schemes and pump-and-dumps” connected to individual crypto assets.

A pump-and-dump is where people create hype to drive up the price of an asset, only to cash out near the top and leave others nursing heavy losses.

Bankman-Fried, who has made a $25 billion fortune from crypto, said regulators should force people who are launching or promoting certain digital assets to follow stricter disclosure and anti-fraud rules.

Read more: A bitcoin bull and investing chief overseeing $1.7 billion lays out how to tackle a crypto winter that could last for at least a year — and 4 cheap projects that will thrive when the halving triggers the next bull cycle

Cryptocurrencies and connected technologies such as non-fungible tokens, or NFTs, have soared in popularity over the last year and a half. Yet the industry has long been plagued by criminality, particularly hacks and scams.

Last week, hackers stole $320 million from a crypto project known as Wormhole. Affiliate Jump Trading later replenished the funds.

Crypto scammers took a record $14 billion in 2021, according to data company Chainalysis. Almost $3 billion of that came from so-called rug-pulls, where people create seemingly legitimate crypto projects and tokens, only to suddenly walk off with the money.

US regulators are increasingly scrutinizing the crypto industry. Gary Gensler, chair of the Securities and Exchange Commission, is pushing crypto exchanges to register with the watchdog, in an effort to better protect individual investors.

Yet there is still relatively little oversight. “In essence, this is an unregulated market,” Rostin Behnam, the head of the US regulator the Commodity Futures Trading Commission, said at the Agriculture Committee hearing.

Behnam called for Congress to grant regulators greater powers.

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