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SEC Chairman Warns of Crypto Lending Platforms With Unrealistic Returns

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Gary Gensler, chairman of the Securities and Exchange Commission (SEC), spoke about crypto on Tuesday at the RFK Human Rights Compass Summer Investor Conference. He has warned the public about the returns that some companies in the crypto space are promising, which he considers “too good to be true.”

Too good to be true

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As reported The Globe and Mail chairman believes lending platforms currently operate “a bit like banks.” They typically offer a return of 4.5% to 7% per year for consumers who deposit funds on their platforms.

“How does someone offer (such a large percentage of return) in the market today and not reveal a lot of information?” said the chairman.

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Other organizations in the crypto space have offered even bigger returns. The Celsius network offers 17% per annum on user deposits. The Anchor protocol — the defi protocol that previously held the majority of TerraUSD (UST) stablecoins in circulation — offered up to 20% APY.

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Both networks are now in ruins. Celsius was forced to freeze customer deposits in an attempt to pay off its debt while UST completely lost its dollar peg, forcing the network to start over.

Cryptocurrency lenders are not highly regulated and lack the consumer protections typical of traditional banks. This is something the chairman has been trying to fix for a long time, including among stablecoin issuers.


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Senator Elizabeth Warren — a longtime crypto skeptic — shared a similar sentiment on Tuesday.

“Too many crypto firms have been able to scam customers with too good to be true claims of safe sky-high returns, leaving ordinary investors to hold the bag while insiders run off with their money,” she said in an email. sent a statement to Bloomberg.

Gensler’s position on the air

The SEC chairman is known for his personal opinion that “the majority” of cryptocurrencies on the market are securities and only a few are commodities. Senator Cynthia Lummis agrees with him on this.

Which of these categories the ether falls into, according to Gensler, remains unclear. In an interview with CNBC earlier this year, he avoided confirming whether ether is actually a commodity or a security. On the other hand, Senator Kirsten Gillibrand argues that his position is that Ether is a commodity.

Ether is the cryptocurrency that powers the Ethereum ecosystem, which is currently responsible for powering the vast majority of the defi space, where the most unregulated yield offerings reside.

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Credit : cryptopotato.com

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