Crypto Users Left Vulnerable as Consumer Protection Agency Weakens

The recent resignation of a senior US consumer protection official has raised concerns that market participants, including cryptocurrency users, are being left to navigate issues on their own. On June 10, Cara Petersen, the acting enforcement director of the Consumer Financial Protection Bureau (CFPB), resigned and criticized the Trump administration in a strongly worded letter, condemning the agency’s significant cutbacks driven by the Department of Government Efficiency. 

 

While Republican lawmakers and the White House have promised to streamline the CFPB to protect consumers without hindering innovation, the agency has faced criticism from industry leaders. Coinbase CEO Brian Armstrong described the CFPB as “unconstitutional,” and other crypto industry figures have echoed concerns about the agency's role. 

 

Although some in the cryptocurrency sector have supported a weakened CFPB to gain more favorable regulation, this has left consumers vulnerable to account freezes and unresponsive platforms, with little or no assistance available. Thousands of complaints have been lodged against platforms like Coinbase and Kraken, with users reporting account lockouts and lack of support. 

 

Historically, the CFPB was created in 2010 as part of the Dodd-Frank Act, in response to the 2008 financial crisis, to regulate banks and financial institutions. Since its inception, it has faced opposition from conservative and industry groups, with some prominent figures calling for its dismantling. The Trump administration accelerated efforts to weaken or shut down the agency, including halting enforcement actions and layoffs, which crypto executives praised as the “right move.” 

 

Critics argue that this deconstruction has compromised consumer protection, leaving ordinary users without recourse when financial institutions violate the law. Advocacy groups and union representatives have challenged the legality of these actions, filing lawsuits and demanding transparency. Meanwhile, some legislators continue to criticize the CFPB as an unchecked regulatory body operating outside congressional oversight. 

 

Despite the industry’s celebration of the CFPB’s decline, everyday consumers—especially crypto users—are suffering from account freezes and lack of support, with no clear mechanism for resolving their issues.