(Reuters) – US Securities and Exchange Commission Chairman Gary Gensler said on Tuesday that investors should beware of promised returns from cryptocurrency platforms and products that seem “too good to be true.”
Wall Street Watchdog’s comments came a day after the world’s largest cryptocurrency fell by 15%, its sharpest one-day decline since March 2020.
Bitcoin, which stabilized on Tuesday, had previously reached a new 18-month low as the large cryptocurrency lender Celsius Network’s freeze on withdrawals and the prospect of sharp US interest rate hikes shook the volatile asset class.
“We have seen again that lending platforms work a bit like banks. They say to investors, ̵6;Give us your crypto. We give you a big return, 7% or 4.5% return.’ How can anyone offer (such a large share of the return) on the market today and not give much disclosure? ” Mr. Gensler said during an industry event.
“I warn the public. If it seems too good to be true, it may well be too good to be true.”
New Jersey-based Celsius, which has approximately $ 11.8 billion in assets, offers interest-bearing products to customers who deposit cryptocurrencies with their platform. It then lends out cryptocurrencies to get returns.
The focus on crypto markets has intensified again this week in the midst of more volatility that has long worried watchdogs.
Companies exposed to cryptocurrencies have previously warned that declines in token prices could have ripple effects, including by triggering margin calls.
Mr Gensler has repeatedly said that in his view, typical crypto-trading platforms, which can carry dozens of tokens, may well meet the definition of “securities” and should be traded and regulated as such.