• SEC boss Gensler warns against promises of excessive returns on the crypto market
• Investors should be skeptical
• Celsius’ measure to freeze customer funds probably cause for warning
According to a report by the Reuters news agency, the head of the US Securities and Exchange Commission (SEC), Gary Gensler, advises investors in the crypto market not to believe unfiltered promises of returns, especially from crypto lending platforms.
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“Too Good To Be True”
“We saw again that lending platforms work a bit like banks. They say to investors, ‘Give us your cryptocurrency. We’ll give you a big return of 7% or 4.5% in return.’ How can anyone offer (such a high percentage of returns) in the market today and not disclose much about it?” Reuters quoted Gensler as saying during an industry event.
Specifically, Gensler is apparently referring to the developments surrounding the crypto lending service Celsius Network. The company had paused all payouts, swaps, and inter-account transfers following a massive withdrawal of customer funds and the crypto market plummet, freezing customer assets. Celsius offers interest-bearing products to customers who deposit cryptocurrencies on its platform. It then lends the cryptocurrencies to earn a return. It should be possible to achieve returns of up to 17 percent, according to Celsius’ customer promise.
For Gensler, promises of returns of this magnitude are obviously a reason to pay attention and become skeptical. “I warn the public that if it seems too good to be true, it may be too good to be true,” the SEC chief said.
Crypto expert Gensler pushes for market regulation
Since Gary Gensler, who is considered a crypto expert, took over the top post, the US SEC have intensified their efforts to regulate the crypto market. The SEC’s work focuses in particular on investor protection.
Crypto lending platforms are apparently being particularly targeted by the supervisory authority. In February, the SEC fined crypto lending platform BlockFi a record $100 million.
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Image sources: Chinnapong / Shutterstock.com, Andrew Harnik/AP