U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has warned about crypto investments that seem “too good to be true.” Meanwhile, the U.S. Treasury Department says the recent turmoil in the crypto market underscores the urgent need for a regulatory framework that mitigates the risks posed by digital assets.
SEC Chairman Gensler’s Crypto Warning
According to Reuters, SEC Chairman Gary Gensler cautioned investors last week about crypto lending platforms offering products that look too good to be true.
The securities regulator’s warning followed a freeze on crypto lender Celsius Network’s withdrawal earlier last week.
“We have seen again that lending platforms are behaving a bit like banks. They tell investors, ‘Give us your crypto. We will give you a big return 7% or 4.5% return,” Gensler was quoted as saying.” How can someone offer (such a large percentage return) in today’s market and not give much disclosure?”
The SEC chairman emphasized.
I would caution the public. If it looks too good to be true, it simply may be too good to be true.
The SEC and several state securities regulators are currently investigating Celsior Network’s decision to freeze withdrawals. According to reports, the company has since hired Citigroup as its counsel and sought help from Akin Gump Strauss Hauer & It sought help from Feld, a law firm specializing in financial restructuring.
Following Celsius, Hong Kong-based Babel Finance temporarily suspended withdrawals and redemptions of its crypto products.
Treasury Officials Stress Urgency of Crypto Regulatory Framework
The collapse of the cryptocurrency Terra (LUNA) and Stable Coin Terraced (UST) and troubles with crypto financing platforms in early May shook the crypto market.
Bitcoin fell below $20K this weekend for the first time since 2020 as the entire crypto market shed over $1 trillion in market cap since mid-April.
In response to the crypto market sell-off, U.S. Treasury officials last week emphasized the urgent need for cryptocurrency regulation. There is nothing that the Treasury Department is “monitoring crypto market activity,” the official told Reuters.
We believe the recent turmoil only underscores the urgent need for a regulatory framework that reduces the risks posed by digital assets.
“We will continue to work closely with our regulatory partners as they take action under their existing authority and provide guidance and expertise as Congress considers legislation to further address these risks,” the officials elaborated.
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