Crypto Firms Gemini, Celsius & Voyager Under SEC Probe for Offering Lending Services

As part of an investigation into companies that pay interest on virtual token deposits, the U.S. Securities and Exchange Commission (SEC) is scrutinizing crypto lending firms Gemini Trust Co, Celsius Network, and Voyager Digital Ltd. for charging high interest for their lending services, according to anonymous sources.

The affected crypto companies allegedly lend out their digital coins to other investors with interest rates that are higher than most bank savings accounts, causing the SEC to review if the companies’ offerings should be registered as securities.

According to the report, crypto lenders have collected more than $40 billion in deposits. The procedure, which is somewhat similar to traditional banking, involves investors taking deposits and paying interest.

For banks, the interest rate is around 0.06% while the crypto lending firms in question offer rates on many tokens of about 3% to as high as 18%, paid in digital coins. These investors, according to the lending companies, borrow crypto at a higher rate to execute their trades.

The major issue why the SEC is investigating the three lending firms is because, unlike bank deposits, the crypto accounts and products are not federally insured or registered with authorities. This risk, not disclosed to the investors, can cause them to lose their principal.

Stating that not all queries or probing lead to enforcement actions, Voyager spokesman Mike Legg implied that there should be no cause for alarm as the ongoing case with the SEC is customary for any financial services companies, whether digital assets related or not.

Regarding the ongoing investigation, Bethany Davis, a spokeswoman for Celsius said,

“All discussions with regulators are confidential…We always have, and will continue to, work with regulators in the U.S. and globally to operate in full compliance with the law.”

Gemini spokeswoman Carolyn Vadino also added in a statement,

“We are one of many companies the SEC has reached out to regarding crypto yield products.” She continued, “We are cooperating voluntarily with this industry-wide inquiry.”

In a recent development, the New York-based crypto exchange Gemini joined hands with Mastercard to launch a crypto reward credit card to award cardholders who deposit their cryptocurrencies into their Gemini accounts.

Source: https://coinfomania.com/sec-probes-crypto-firms-gemini-celsius-voyager/#utm_source=rss&utm_medium=rss&utm_campaign=sec-probes-crypto-firms-gemini-celsius-voyager