Crypto Lending Firms Celsius Network, Gemini Face SEC Scrutiny

Discussion in 'Crypto Assets' started by johnarb, Jan 26, 2022.

  1. johnarb


    Investors must be protected from high interest rates on their money!!

    Why get 10% APY on your USD when you can get 0.1% at Bank of America savings account??


    Crypto Lending Firms Celsius Network, Gemini Face SEC Scrutiny
    • Review focuses on whether offerings are securities, people say
    • High-yield products have sparked investor protection concerns
    Alex Mashinsky, founder and chief executive officer of Celsius Network.Photographer: Dania Maxwell/Bloomberg
    Joe Light

    , Matt Robinson

    , and Zeke Faux

    January 26, 2022, 10:44 AM PST

    The U.S. Securities and Exchange Commission is scrutinizing cryptocurrency firms Celsius Network, Voyager Digital Ltd. and Gemini Trust Co. as part of a broad inquiry into companies that pay interest on virtual token deposits, according to people familiar with the matter.

    The SEC enforcement review focuses on whether the companies’ offerings should be registered as securities with the watchdog, said the people, who weren’t authorized to speak publicly. The firms are able to pay customers rates higher than most bank savings accounts by lending out their digital coins to other investors, a practice that the SEC and states including New Jersey and Texas have said raises concerns about investor protection.

    The probes add to uncertainty for the burgeoning sector, which is grappling with sharply falling coin prices -- Bitcoin earlier this month plunged 50% from an all-time high -- as well as regulators who are eager to put guardrails around digital assets. BlockFi Inc., another crypto lender, faces SEC scrutiny, Bloomberg reported last year, and both Celsius and BlockFi have been the subjects of earlier enforcement actions by state securities regulators. Those reviews are ongoing, and the firms have disputed the allegations.

    Read More: BlockFi Faces SEC Scrutiny Over High-Yield Crypto Accounts
    Lawmakers Look to Clean Up Crypto Power
    “We are one of many companies the SEC has reached out to regarding crypto yield products,” Gemini spokeswoman Carolyn Vadino said in a statement. “We are cooperating voluntarily with this industry-wide inquiry.”

    “All discussions with regulators are confidential,” said Bethany Davis, a spokeswoman for Celsius. “We always have, and will continue to, work with regulators in the U.S. and globally to operate in full compliance with the law.”

    The regulatory environment is evolving rapidly and “it’s normal for financial services companies, digital asset related or otherwise, to be in ongoing dialog with regulators,” Voyager spokesman Mike Legg said.

    The SEC hasn’t accused Gemini, Celsius or Voyager of any wrongdoing and not all agency queries lead to enforcement actions. An SEC spokeswoman declined to comment.
  2. MKTrader


    Exactly. You must play our games (long-only stock market, 0.001% interest rates, no exotic stuff in retirement accounts) else we're going to regulate, fine and call it a scam.
    gkishot, murray t turtle and johnarb like this.
  3. %%
    I though you were calling BAC[ + thier low rates/LOL] a scam/my bad , on 2nd read:D:D
    johnarb likes this.
  4. Baron

    Baron ET Founder

    It would sure be nice if the SEC would get through their year-long lawsuit with Ripple labs first to determine whether XRP is a security or not before they start worrying about interest being paid on tokens that have also not been ruled as securities.
    Clubber Lang and johnarb like this.
  5. johnarb



    And these are on stablecoins so "low-risk"

    I have a friend (not in quotes, real life friend) who asked me about BlockFi USD interest rates 9% last year and I said yea, that's real

    He was wondering why it was so high, but said he'd give it a try with a $10K deposit

    I told him it's actually very low, but if he's ok with 9%, I'm happy for him

    Anyway, got a text from him a week or so ago that he's been adding funds to his BlockFi account since the last time we texted about it and had just sent another $10K the previous day

    He was worried that it may not last long...

    I said it's going to last as long as US Regulators don't stop it and again I told him it's kind of low, but he's happy so I'm happy for him

    US Regulators are worried that the bank deposits are going to start moving to BlockFi other similar businesses once the word spreads, imho
    MKTrader likes this.
  6. Baron

    Baron ET Founder

    Right! Because they are!
    johnarb likes this.
  7. Baron

    Baron ET Founder

    Honestly, the speed at which the entire crypto/defi space is moving is literally making the entire regulatory / banking world look like the slow-moving sloth it is. They are not prepared in any way to deal with this level of monetary system transformation, and I mean transformation from the top to the bottom in pretty much every area, and at breakneck speed.
    johnarb likes this.
  8. RedSun


    All those crypto suckers suck your blood dry....
  9. MKTrader


    Yeah, stick with banks that pay 0.001% and the government that's here to help you stay poor and uninformed, that is.
    johnarb and Clubber Lang like this.
  10. MKTrader


    If the powers-that-be didn't put us in the situation we're in, maybe they wouldn't have to worry. It's either make a tiny fraction of 1% with your "safe" and liquid money, or let the Fed hike a few times and watch stocks/bonds/real estate crash as the gov't can't struggles to pay 2-3% interest on the tremendous debt burden they created.
    #10     Jan 26, 2022
    johnarb likes this.