US Securities and Exchange Commission (SEC) Chairman Gary Gensler has warned the public about crypto investments that seem “too good to be true”. Meanwhile, the US Treasury Department said that the recent turmoil in the cryptocurrency market underscores the urgent need for a regulatory framework that mitigates the risks posed by digital assets.
SEC Chair Gensler’s Crypto Alert
SEC Chairman Gary Gensler last week cautioned investors about crypto lending platforms offering products that sound too good to be true, Reuters reported.
Crypto lender Celsius Network’s withdrawals were frozen early last week following a warning from the securities regulator.
“We have again seen that the lending platforms are working just like banks. They are telling investors ‘Give us your crypto. We’ll give you a whopping 7% or 4.5% return,'” Gensler was quoted as saying. “How does one in the market today provide (such a large percentage of returns) and not give too much disclosure?”
The SEC chairman emphasized:
I caution the public. If it sounds too good to be true, it may be too good to be true.
The SEC and several state securities regulators are currently investigating the decision to halt the withdrawal of Celsius Network. According to reports, the company later hired Citigroup as an advisor and sought help from Akin Gump Strauss Hauer & Feld, a law firm specializing in financial restructuring.
Following Celsius, Hong Kong-based Babel Finance temporarily suspended the withdrawal and redemption of its crypto products.
Treasury Official Stresses Urgent Need for Crypto Regulatory Framework
The collapse of the cryptocurrency Terra (LUNA) and stablecoin Terraced (UST) in early May and the troubles on the crypto lending platform have rocked the crypto market.
This weekend bitcoin fell below $20K for the first time since 2020 as the overall crypto market has lost more than a trillion dollars in market capitalization since mid-April.
Following a sell-off in the cryptocurrency market, a US Treasury Department official last week highlighted the urgent need for cryptocurrency regulation. The official told Reuters that there is nothing that the Treasury Department is “monitoring activity in the crypto market”:
We believe that the recent turmoil only underscores the urgent need for a regulatory framework that mitigates the risks of digital assets.
“We continue to work closely with our regulatory partners as they act under their current authorities, and provide guidance and expertise as Congress considers legislation to further address these risks,” said the official. explained in detail.
What do you think of SEC Chairman Gensler’s warning? Let us know in the comments section below.
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