As Facebook Plans to Roll Out New Cryptocurrency, Tester Grills Official on Cybersecurity and Fraud Prevention
Senator to Facebook: “How can we be assured that our money is going to be there?”
(U.S. Senate) – As Facebook plans their 2020 roll out of Libra-a new global cryptocurrency-U.S. Senator Jon Tester today grilled the project’s top executive on its plans to mitigate cybersecurity risks and potential fraud in the wake of the tech giant’s misuse of consumer data during the 2016 election.
At today’s Senate Banking Committee hearing, Tester prodded the project’s head David Marcus on how Facebook intends to protect consumer security, data privacy, and money, if Libra accounts are hacked or stolen.
“In cryptocurrencies like Bitcoin, transactions are final. If somebody gets hacked, there’s not much I can do about it,” Tester said. “…But if I pull out my driver’s license and my credit card falls on the ground, and someone takes that card to Cleveland, Ohio and buys hoverboards with it, the bank always makes [the customer whole], it’s immediate. The question is will it be immediate in your case?”
In response to Tester’s concerns about contingencies for a financial crash similar to the run on banks in 2008, Marcus responded that Libra-unlike other cryptocurrencies-will be backed by a one-to-one reserve fund composed of bank deposits and government securities that will stabilize its value. He also reported that Facebook plans on setting up a 24/7 customer service hotline that will provide account recovery and fraud protection.
Facebook claims that the digital currency is intended to allow people to send money online cheaper and faster, and open up more access to financial services. Tester and his colleagues acknowledged those benefits while raising concerns that bad actors could potentially abuse the system.
“Facebook hasn’t been meritorious-and I’m being generous-because quite frankly there are people on Facebook that are doing stuff all the time that have a different agenda than what’s right,” Tester said. “The past performance of Facebook has not been aggressive enough. And it has had some pretty negative impacts on some stuff worldwide. How are you going to prevent bad actors from using this?”
Facebook’s history of mishandling consumer data and relaxed approach to policing harmful users has raised questions about whether the cryptocurrency will enable bad actors to abuse the program. Tester also raised concerns about the risks of money laundering and terrorism financing, as well as potential threats to consumer protections and data privacy.
Tester has been an outspoken critic of both corporate and government overreach, persistently defending the privacy rights of Montanans. Last year, he grilled tech executives from America’s largest companies on their data collection and privacy practices and he has consistently criticized the mass collecting and selling of consumer data by large corporations.
Watch Tester’s full remarks at today’s Banking Committee hearing HERE.