Attorney General James Calls on Congress to Preserve States’ Ability to Protect Americans from Cryptocurrency Scams
NEW YORK – New York Attorney General Letitia James today led a bipartisan coalition of 17 other attorneys general in opposing the Digital Asset Market Clarity Act (Clarity Act). In a letter sent to Senators Tim Scott and Elizabeth Warren, Chair and Ranking Member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, Attorney General James and the coalition warn that the Clarity Act would jeopardize their ability to protect investors from rampant digital cryptocurrency fraud and scams. The attorneys general caution that as written, the Clarity Act would prevent states from serving as the first line of defense against the escalating epidemic of cryptocurrency fraud.
“My office has proudly led the fight to protect New Yorkers and all Americans from rampant cryptocurrency fraud,” said Attorney General Letitia James. “As written, the Clarity Act would embolden scammers and potentially strip attorneys general of our authority to protect our states’ investors and their wallets. Together with my attorney general colleagues, I urge Congress not to pass the Clarity Act.”
The Office of the New York Attorney General (OAG) leads the nation in holding crypto companies accountable for failing to protect investors from scams. In 2019, Attorney General James brought the first and only enforcement action against the largest stablecoin issuer, Tether, for recklessly and unlawfully covering up massive financial losses from investors. The OAG has secured billions of dollars in refunds and fines from major crypto brokers that violated NY law or failed to protect investors from scams, including Coin Café, Gemini, Genesis, and KuCoin. The OAG has also worked with federal counterparts to secure major victories on behalf of fraud victims including in cases brought against GTV, Nexo, and Blockfi.
The Federal Bureau of Investigation (FBI) reported $11.4 billion in losses from complaints involving cryptocurrencies in 2025, an increase of 22 percent from 2024, with an average reported loss of $62,604. The Federal Trade Commission (FTC) has reported $1.78 billion in losses from complaints involving cryptocurrencies in 2025, a 25.6 percent increase from 2024. In New York, complaints to the OAG regarding crypto scams have tripled over the last three years, and crypto scam losses reported to the OAG totaled nearly half a billion dollars over the last five years.
The financial impact of crypto scams on victims can be devastating. In its present form the Clarity Act would muddy the waters, making it harder for OAG—and attorneys general nationwide—to continue efforts to crack down on cryptocurrency scams and hold platforms that violate the law accountable. The Clarity Act would also allow the Securities and Exchange Commission (SEC) to preempt state registration authorities. This unprecedented grant of authority would not only apply to digital assets but would also broadly grant unilateral discretion to SEC to reset the scope of federal preemption, potentially upending the state securities regulatory regime. The attorneys general assert that Congress should not cede such significant power to SEC.
State enforcement powers have been a critical weapon in fighting the crypto fraud epidemic. Since 2017, states have brought over 330 anti-fraud enforcement actions against scammers in the crypto ecosystem, shutting down fraudulent websites and schemes, securing justice for victims, and prioritizing cases where victims had no federal or private recourse.
Maintaining state oversight of the cryptocurrency industry is critical to protect consumers and investors. In their letter, the attorneys general advocate for legislation that would:
- Preserve states’ enforcement role for both tokenized and non-tokenized securities;
- Preserve cooperation between the federal government and the states;
- Codify states’ role as regulators of cryptocurrencies and preserve their registration regimes that require crypto platforms to certify with states; and
- Clarify ambiguous language that could otherwise embolden bad actors and lead to legal battles over enforcement.
Joining Attorney General James in sending the letter to Congress are the attorneys general of Arizona, California, Connecticut, Delaware, Illinois, Kansas, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, Ohio, Virginia, Washington, Wisconsin, and the District of Columbia.
Attorney General James is a national leader in protecting New York investors and holding cryptocurrency companies accountable. In April 2026, Attorney General James secured over $5 Million from crypto platform Uphold for promoting a fraudulent investment scheme. In July 2025, Attorney General James took action to stop a crypto scam targeting Russian-speaking New Yorkers. In March 2025, Galaxy Digital, a New York-based crypto firm, agreed to settle OAG’s claims that it fraudulently pumped the price of Luna tokens in a $200 million settlement. In January 2025, Attorney General James became the first regulator to provide notice of litigation by depositing a nonfungible token (NFT) into the wallets scammers used to steal the victims’ cryptocurrency. In June 2024, Attorney General James sued cryptocurrency trading company NovaTechFx for engaging in an illegal pyramid scheme that defrauded hundreds of thousands of investors worldwide, including over 11,000 New Yorkers, of over a billion dollars’ worth of cryptocurrency.
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