Consumer complaints about cryptocurrency on the rise amid crypto recession, data shows

Consumer complaints about cryptocurrency on the rise amid crypto recession, data shows

Consumer complaints about cryptocurrencies have risen during increased market volatility over the past two years, affecting not only cryptocurrency exchanges but also traditional financial institutions such as JPMorgan Chase & Co. and Wells Fargo & Co.

The Consumer Financial Protection Bureau, under a presidential order to increase efforts to monitor consumer complaints and “enforce against unfair, deceptive or abusive practices” in cryptocurrency markets, has received 2,734 confirmed crypto-related consumer complaints against companies focused on digital assets in its public database. Between January 1, 2020 and August 26, 2022, according to an analysis of data from Dynamic Securities Analytics Inc. , a compliance data company based in Tampa, Florida. Of those, more than 1,800 came in the past calendar year alone.

Consumer complaints about cryptocurrencies sent by the CFPB range from fraud and scams to not being able to withdraw funds. Companies involved in the complaints include crypto-origin companies such as Binance.US and Coinbase Global a company ,

The data shows Gemini Trust Co. and Block Inc. , as well as traditional financial institutions such as JPMorgan, Wells Fargo and PNC Bank NA.

While complaints about crypto products and services still represent a narrow slice of the overall volume of reporting received by consumer financial regulators, the overall upward trend suggests that concerns about consumer complaints may lead to more regulatory scrutiny of cryptocurrency. The industry has so far received less attention from regulators than in areas such as investor protection and market integrity.

The CFPB uses complaints to report on the rule-making process and enforcement action, and shares data with other agencies and law enforcement, such as the Federal Trade Commission and the FBI. The agency has not indicated if it plans to take any action based on the crypto-related complaints it has received so far.

Transaction-related issues topped the list of complaints, including issues with apps not working or placing orders. About 28% of the complaints were about scams or scams related to cryptocurrency, while another 20% derive from unavailable funds, according to the data. Consumers also reported issues to the agency about credit reporting, debt collection, mortgages and student loans, among other things.

Alison Jimenez, founder of compliance data provider Dynamic Securities Analytics.


Bob Baggett Photography by Bob Baggett

Created in 2012, the Public Complaint Recording Dataset aims to provide transparency and real-time information so that the public can understand larger industry trends. The CFPB carriers mentioned in the complaints to give them an opportunity to respond, then publish reports that identify specific problems consumers face, minus their personally identifiable information.

Alison Jimenez, founder of Dynamic Securities Analytics, said the analysis shows that “not all complaints about cryptocurrency are found in crypto companies,” adding that banks and other traditional financial services firms are also mentioned in these crypto complaints. She said the exchanges Coinbase, Gemini and Binance. The US received the highest number of complaints, and complaints about crypto companies included those related to other financial products such as credit cards, as well as sending and receiving money.

“It’s a good starting point for further research and adding more investigative questions of what’s going on in these companies,” she said of the analysis.

Kathy Kraninger, a former CFPB director in the Trump administration, is the vice president for regulatory affairs at crypto compliance platform Solidus Labs.


In Mass Photography 2020

It remains to be seen how the CFPB will now attempt to clarify its jurisdiction over cryptocurrency regulation, as a number of agencies can claim authority to provide consumer protection, said Kathy Kraninger, a former CFPB director under the Trump administration. She said other agencies, such as the Securities and Exchange Commission, have authority to protect investors, and that the Department of Justice and state attorneys general also act on fraud and fraud-related cases. “Who takes precedence, which agency has the best authority, is an important aspect here,” she said.

But for crypto companies, said Ms. Kraninger, who is now vice president for regulatory affairs at crypto compliance platform Solidus Labs, it is important that responsible actors in the crypto ecosystem call out the bad players. She added that the industry currently has monitoring tools in place to look for issues such as malicious code in smart contracts, market manipulation and money laundering, and companies should use them to call out fraud and help educate consumers.

In addition, crypto companies should take a look at their disclosures to ensure that they are not providing misleading information about the products consumers deal with, the risks their products involve, and the protection companies can provide.

“These are the usual things in traditional finance, including disclosure [what risks there are] to the customer base. “There are companies that are doing this, and they have to do it…and that’s the confirmation that investors are looking for as well.”

write to Mengqi Sun at

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