SEC is investigating three crypto lending platforms

abdelaziz Fathi

The US Securities and Exchange Commission is investigating Celsius Network, Voyager Digital, and Gemini Trust, as a part of a broader scrutiny against cryptocurrency lending platforms.

According to a Bloomberg report, the regulator did not accuse the three crypto firms of any wrongdoings or brought charges yet. Rather, the SEC is checking if their DeFi and lending products should be registered as securities.

“We are one of many companies the SEC has reached out to regarding crypto yield products,” a Gemini spokesperson told Bloomberg. “We are cooperating voluntarily with this industry-wide inquiry. We always have, and will continue to, work with regulators in the U.S. and globally to operate in full compliance with the law. All discussions with regulators are confidential,” Celsius’ Bethany Davis added.

Earlier in September, the US regulators signaled a big change in policing cryptocurrencies and the growing Defi sector after they blocked Coinbase from launching a new crypto lending product. The SEC officials have increasingly been talking about a need to crack down on these products, which are essentially unregistered interest-bearing accounts, the agency claims.

The use cases presented by major players reflect that the lending trends are shifting to a reliance on digital assets to support business’ operations rather than for only betting on the short term price moves. Specifically, recent data shows substantial interest from the institutional players to borrow in order to facilitate a specific strategy such as for shorting, arbitrage, or working capital purposes.

SEC’s probe into DeFi products comes amid heightened regulatory interest into cryptocurrencies and the digital asset market. Chair Gary Gensler called on Congress to give the agency more authority to better police crypto trading and lending platforms, which pay customers rates higher than most bank savings accounts.

The New York Attorney General’s Office also ordered two cryptocurrency lending platforms, which were reportedly Nexo and Celsius, to stop operating in the state. She also sent three other platforms letters with questions about their operations.

The state authority directed Nexo and another crypto lender, Celsius, to cease operations in October, citing failure to register the business in New York and performing unlawful activities. Last summer, Celsius and BlockFi received cease-and-desist orders from other state securities regulators.

Read this next

Digital Assets

OneCoin founder Ruja Ignatova is selling penthouse in UK

OneCoin founder Ruja Ignatova, who steered one of the world’s biggest cryptocurrency frauds, is back into the spotlight more than five years after vanishing from the public eye.

Digital Assets

Bitpay taps MoonPay to offer access to +60 cryptocurrencies

Crypto payment service provider Bitpay said it’s partnering with exchange and web3 infrastructure provider MoonPay to provide its users with easier access to buy cryptocurrency instantly.

Digital Assets

New York investigates Gemini over FDIC insurance claims

New York regulators are investigating Gemini over “false and misleading” claims the Winklevoss-owned exchange had made about whether client funds are insured by the government.

Digital Assets

Binance launches Mastercard-backed crypto card in Brazil

In partnership with Mastercard, crypto giant Binance is launching its pre-paid card offering cryptocurrency “rewards” on customers’ purchases.

Digital Assets

Circle publishes a breakdown of USDC reserves for December

Boston-based stablecoin issuer Circle has revealed a breakdown of its reserves for December 2022, as well as a complete list of USDC reserve custodians.

Retail FX

Monex reports lower revenues as crypto downturn bites

Monex Group has reported its Q3 2022 financial metrics, which saw a reversal in terms of its revenues as TradeStation was grappling with a crypto market crash that has tanked the profitability of its crypto business.

Inside View

Broadridge report finds 27% of firms’ overall IT budget goes to digital transformation

“A new chapter in digital transformation is emerging. In our work with clients across the financial services industry we see leading firms are already reaping the benefits from digitalization and the use of technologies such as AI and blockchain/DLT, as they adapt to economic headwinds and new competitive dynamics”

Executive Moves

Ripple announces Monica Long as President

“I’m incredibly honored to take on the role of President at Ripple as we expand deeper into crypto-enabled services like liquidity, settlement and custody.”

Executive Moves

Arabesque AI appoints Carolina Minio Paluello as CEO

“Arabesque AI is uniquely positioned to service the asset management industry’s need to meet the growing market demand for hyper customised portfolios.”

<