Crypto▼ Bearish
New York AG James Puts $500M Crypto Loss Figure Before Senate Panel
NY AG Letitia James told a Senate panel that crypto scam losses hit nearly $500M in her state over five years. She warned the CLARITY Act would strip state enforcement tools and proposed new rules including a ban on mixer-linked crypto conversions.
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New York Attorney General Letitia James brought a specific number to Washington: nearly $500 million in reported crypto scam losses over five years in her state alone. Testifying before the Senate Permanent Subcommittee on Investigations, she warned that the Digital Asset Market Clarity Act would strip state regulators of enforcement tools they have actually used.
Crypto scam complaints to her office have tripled over the past three years, James told the panel. The CLARITY Act, as drafted, would shift primary oversight of digital asset markets from state regulators to the Commodity Futures Trading Commission. That move would undermine the ability of states to investigate fraud and pursue bad actors, she said.
State enforcement is not redundant paperwork. New York has been one of the few jurisdictions that has actually held crypto platforms accountable. Federal agencies are slower. State attorneys general can act faster. That flexibility matters when the market changes as fast as crypto does.
James gave the subcommittee a specific list of demands. She wants Congress to require crypto platforms to follow anti-money laundering rules, know-your-customer protocols, and cybersecurity standards. She also wants active monitoring for suspicious activity and market manipulation – not passive compliance, real-time attention. If a platform fails to protect customers from fraud, she wants it held financially liable. That would create a direct financial incentive for platforms to prioritize security instead of treating compliance as a box-checking exercise.
She went further. James wants Congress to ban the conversion of mixer-linked or untraceable cryptocurrencies into US dollars. Mixers obscure the origin of funds and are widely used in money laundering schemes. Cutting off the conversion pathway would make it harder to clean dirty crypto through legitimate on-ramps. The goal is to make the laundering pipeline harder to use, not to ban crypto outright.