SEC's Gary Gensler Warns About Crypto Lending Platforms

Gary Gensler warns anybody investing in cryptocurrency with the expectation of great returns: beware. The head of the US Securities and Exchange Commission reiterated his cautions regarding lending platforms on Tuesday. According to Gensler, investors should be suspicious of assertions that would offer double-digit interest rates.

In his remarks that were given online at the RFK Human Rights Compass Summer Investors Conference, Gensler warned the public to exercise caution since the lending platforms appeared to function somewhat like banks but did not name any specific lenders in his discussion. 

Since taking over in April 2021, he's taken a harsh stance on crypto products that may fall within the agency's jurisdiction and the platforms on which they trade, according to SEC documents.

This week, cryptocurrency prices have taken a nosedive following the announcement on Monday by cryptocurrency lender Celsius that it would be halting withdrawals. Bitcoin saw a drop of up to 10 percent on Tuesday, according to the Bitpush Terminal.

Lending-related products have proven to be a particularly contentious issue with the regulator. After receiving a legal threat from the government the previous year, Coinbase decided to abandon their ambitions to launch one, according to a Coinbase blog post.

In February, according to the SEC website, the major cryptocurrency platform BlockFi Inc. reached an agreement to pay the SEC and state authorities $100 million to settle claims that it had illegally sold a program that pays clients exorbitant interest rates in exchange for lending out their digital tokens. BlockFi did not provide an admission or denial in response to the charges.

Author: Garrett Meifert

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