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Securities and Exchange Commission Chairman Gary Gensler, who famously said cryptocurrency is “rife with fraud, scams, and abuse,” is reiterating his warnings about crypto lending platforms offering exceptionally high returns to investors.
Gensler said Tuesday that investors need to be careful with crypto lenders that promise double-digit returns. “They’re operating a little bit like banks,” he said during a virtual session at the RFK Human Rights Compass Summer Investors Conference, as reported by Bloomberg. “I caution the public.”
The SEC head’s remarks come after centralized crypto lending platform Celsius Network earlier this week froze customer withdrawals, triggering a steeper selloff in bitcoin (BTC-USD), ethereum (ETH-USD) and other major digital tokens. It didn’t take much longer for crypto exchange Binance to briefly pause user bitcoin withdrawals as high market volatility takes hold.
Over the past year, the securities agency had already targeted crypto lenders that offered customers high-yielding products. Most notably, BlockFi in February agreed to pay $100M in penalties to the SEC after failing to register the offers and sales of its high-interest crypto lending product.
In mid-February, the SEC said it will pursue crypto platforms operating outside the regulatory framework.