Coinbase, Gemini CEOs cheer as Consumer Financial Protection Bureau chief defangs agency

The future of the Consumer Financial Protection Bureau (CFPB) appears to be in jeopardy.Acting head of the agency Russell Vought, a conservative analyst who played a key role in the Project 2025 policy initiative, has reportedly instructed employees to "cease all supervision and examination activity" and pause enforcement actions. Vought also announced on X that the agency would not request future funding from the Federal Reserve, which could affect the agency once its ample 2025 funding runs dry. Tyler Winklevoss, CEO of crypto exchange Gemini, welcomed the news with a post on X. "CFPB Unplugged," Winklevoss said, including a picture of a 404 page on the agency's website. Coinbase CEO Brian Armstrong was more explicit in his condemnation of the agency. "100% the right call," Armstrong said in his X post. "The CFPB is unconstitutional on the face of it. And even if it wasn’t, it should be deleted as we already have DOJ to prosecute fraud, and (many) other financial services regulators. It’s an activist organization that has done enormous harm to the country."The agency said in July, 2023 that its enforcement actions have returned $17.5 billion to American consumers since the agency's founding in the wake of the 2008 financial crisis. The agency said it had sent over 4 million complaints to companies on behalf of consumers. Elon Musk has also cheered the move. "They did above zero good things, but still need to go," Musk wrote on X. Musk once referred to the CFPB as a "duplicative regulatory [agency]." The Supreme Court has repeatedly considered the question of the agency's constitutionality, since its funding comes from the Federal Reserve rather than appropriations dictated by Congress. The Supreme Court recently affirmed in May 2024 that the agency's funding mechanism is constitutional in a 7-2 decision. While the particular funding method protects the CFPB's budget from being restricted by Congress, there's nothing stopping the acting head of the agency from requesting less funding in order to reduce the bureau's effectiveness, as has happened here.Coinbase's complaint countA larger share of CFPB complaints mention Coinbase than the exchange's competitors that likewise serve U.S. clients. A search of the CFPB's database shows over 7,600 complaints mention Coinbase, compared to 487 complaints that mention Gemini and 297 complaints that mention Kraken. A subreddit moderated by an official Coinbase account also features a number of posts from users discussing their experience with filing reports with the CFPB, which expects a 15-day response time to official complaints. The subreddit was apparently locked six days ago, as only approved users are currently allowed to post, and no new posts have been published in that time. Coinbase's customer support has been the subject of criticism from users and security researchers in the past. Blockchain sleuth ZachXBT recently claimed Coinbase users have lost over $65 million to social engineering scams since last December. Representatives for Coinbase and Gemini did not immediately respond to a request for comment. Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.