$11 Billion in Crypto Losses Adds Pressure on CLARITY Act
New York Attorney General Letitia James called on Congress to adopt stronger federal safeguards for cryptocurrency markets while preserving state authority to pursue fraud cases. In her Senate testimony on July 27, James argued that rising scam losses require tougher oversight, not limitations on state enforcement.
James specifically criticized the CLARITY Act, which would transfer primary oversight of digital assets to the Commodity Futures Trading Commission (CFTC) and override important state regulatory authority. She warned this would make it harder for states to investigate fraud and hold cryptocurrency businesses accountable.
Complaints submitted to James’ office about cryptocurrency scams nearly tripled over the past three years, while reported crypto fraud and scam losses approached $500 million over the past five years. The Federal Bureau of Investigation (FBI) reported that Americans submitted 181,565 cryptocurrency-related complaints in 2025, totaling more than $11 billion in losses.
James urged Congress to require cryptocurrency platforms to comply with anti-money laundering (AML) rules, know-your-customer (KYC) requirements, cybersecurity standards, market surveillance obligations, and financial responsibility for preventable fraud. She also recommended restricting cryptocurrency transactions that cannot be fully traced from conversion into U.S. dollars, and prohibiting elected officials and recent government employees from participating in crypto regulation where financial conflicts may exist.
The attorney general highlighted several enforcement actions supporting her argument, including settlements involving Tether, Coin Café, Gemini, Genesis, Kucoin, and a recent agreement requiring Uphold to pay more than $5 million over its promotion of the CredEarn investment program.
Federal lawmakers continue debating the CLARITY Act after the House approved the legislation in July 2025. A year later, House lawmakers renewed their push for the bill, while Senate action remained uncertain. James has also criticized the GENIUS Act for failing to require stablecoin issuers to return stolen funds to fraud victims.