September 09, 2022

Warren, Menendez, Brown, Feinstein, Sanders, and Booker Press Meta for Details on its Efforts to Combat Cryptocurrency Scams

Text of Letter (PDF) 

Washington, D.C. – U.S. Senators Elizabeth Warren (D-Mass.) and Bob Menendez (D-N.J.), members of the Senate Banking Committee, Sherrod Brown, Chair of the Senate Banking Committee, and Dianne Feinstein (D-Calif.), Bernie Sanders (I-Vt.), and Cory Booker (D-N.J.) sent a letter to Meta CEO Mark Zuckerberg, requesting information about the company’s efforts to combat cryptocurrency scams and hold bad actors accountable for cryptocurrency fraud on its platforms. 

“Data from the Federal Trade Commission (FTC) shows that scams involving cryptocurrency are becoming increasingly prevalent on social media. From January 1, 2021 through March 31, 2022, 49% of fraud reports to the FTC involving cryptocurrency specified that the scam originated on social media,” wrote the senators. “Alarmingly, these scams cost consumers a staggering total of $417 million and take many forms, from ‘investment scams’ where consumers are promised huge returns and have their investments stolen, to ‘romance scams’ where fraudsters create fake profiles to build a relationship with their targets before scamming them.”

The senators also point out how Meta’s sites are particularly popular hunting grounds for scammers looking to defraud consumers. Of those who have reported being scammed out of cryptocurrency on a social media website, 32% identified the scam as having originated on Instagram, 26% on Facebook, and 9% on WhatsApp.

“Meta has previously acknowledged the potential for crypto scammers to operate on its platforms. In fact, in January 2018, Facebook banned crypto ads, claiming that ‘there are many companies who are advertising binary options, ICOs and cryptocurrencies that are not currently operating in good faith.’ At the time, you claimed this policy was meant to ‘make it harder for scammers to profit from a presence on Facebook,’” added the senators. “This ban clearly shows that you understand the risks posed by this type of content to users. You later partially reversed the ban on crypto ads, and more recently expanded the list of regulatory licenses accepted in order to advertise cryptocurrency on Facebook and Instagram. A higher level of scrutiny is needed for this type of content.” 

Senator Warren is an outspoken advocate for reining in cryptocurrency to protect consumers and the environment: 

  • In July 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Commitee, Senator Warren called out the role that large institutional investors, including venture capital, hedge funds, and private equity, play in funding, hyping, and sucking money from crypto projects that scam mom-and-pop investors. 
  • In May 2022, Senators Warren and Tina Smith (D-Minn.), sent a letter Fidelity, asking the company to explain its decision to allow Bitcoin investments for 401(k) plans, despite the Department of Labor’s warnings about 401(k) crypto investments.
  • In March 2022, Senator Warren, Senate Armed Services Committee Chair Jack Reed (D-R.I.), Senate Intelligence Committee Chair Mark Warner (D-Va.), and Senate Defense Appropriations Subcommittee Chair Jon Tester (D-Mt.) introduced the Digital Asset Sanctions Compliance Enhancement Act to ensure that Vladimir Putin and Russian elites don't use digital assets to undermine the international community’s economic sanctions against Russia following its invasion of Ukraine.
  • In March 2022, at a a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren highlighted the various cryptocurrency tools that could make it easier for sanctioned individuals to hide their wealth and lessen the impact of Russian sanctions.
  • In March 2022, at a a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren warned that cryptocurrency may allow Russia to dodge sanctions and urged stronger regulation of the crypto market to ensure that countries, drug traffickers, cyber criminals, and tax cheats can’t evade economic pain
  • In March 2022, Senators Warren, Warner, Reed, and Sherrod Brown (D-Ohio), Chair of the Senate Banking, Housing, and Urban Affairs Commitee, sent a letter to Treasury Secretary Janet Yellen, asking about the Treasury Department’s plans to enforce sanctions-compliance guidance for the cryptocurrency industry to ensure that economic sanctions remain an effective tool for achieving foreign policy goals.
  • In January 2022, Senators Warren, Whitehouse, Merkley, Markey, and Maggie Hassan (D-N.H.), and Representatives Tlaib, Huffman, and Katie Porter (D-Calif.) sent letters to six cryptomining companies raising concerns over their extraordinarily high energy usage. 
  • In December 2021, Senator Warren sent a letter to Greenidge Generation Holdings Inc., which operates a Bitcoin mining facility in upstate New York, expressing concern about the company’s energy usage and its impacts on the environment and consumers.
  • In December 2021, during a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren raised concerns over the growing risks presented by stablecoins. 
  • In September 2021, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called on regulators to step up to address crypto's regulatory gaps and ensure an inclusive financial system. 
  • In July 2021, Senator Warren sent a letter to the Securities and Exchange Commission Chair Gary Gensler requesting information about the agency's authority to regulate cryptocurrency exchanges and protect consumers from risks posed by the highly volatile cryptocurrency market.
  • In June 2021, chairing a hearing  of the Senate Banking, Housing, and Urban Affairs Committee's Subcommittee on Economic Policy, Senator Warren delivered remarks on the opportunities and risks that digital currencies present. 
  • In a June 2021 interview, Senator Warren called the market for cryptocurrencies the “wild west,” and said digital currency is “not a good way to buy and sell things and not a good investment and an environmental disaster.”