U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has warned the public about crypto investments that seem “too good to be true.” Meanwhile, the U.S. Treasury Department said the recent crypto market turmoil has highlighted the urgent need for a regulatory framework to mitigate the risks posed by digital assets.
SEC Chairman Gensler’s Encryption Warning
SEC Chairman Gary Gensler warned investors last week that the offerings from crypto lending platforms seemed too good to be true, Reuters reported.
Securities regulator’s warning comes after crypto lender Celsius Network Withdrawal freeze Early last week.
“We’re seeing lending platforms operating a bit like banks again. They say to investors, ‘Give us your cryptocurrency. We’ll give you big returns of 7% or 4.5%,’” Gensler was quoted as saying. “How can someone in today’s market provide (such a large percentage of returns) without providing a lot of information?”
The SEC Chairman emphasized:
I remind the public. If it looks too good to be true, it is probably too good to be true.
The SEC and several state securities regulators are currently investigation Celsius Network has decided to freeze withdrawals. The company then reportedly hired Citigroup as a consultant and turned to Akin Gump Strauss Hauer & Feld, a law firm specializing in financial restructuring, for help.
Following Celsius, Hong Kong-based Babel Finance has temporarily suspended withdrawals and redemptions of its crypto products.
Treasury officials stress urgent need for crypto regulatory framework
The collapse of the cryptocurrency terra (LUNA) and stablecoin terrausd (UST) in early May and troubles with crypto lending platforms have shaken the crypto market.
bitcoin fell below $20,000 For the first time since 2020 this weekend, the entire crypto market has lost more than $1 trillion in value since mid-April.
A U.S. Treasury Department official last week highlighted the urgent need for cryptocurrency regulation after the cryptocurrency market sell-off. The official told Reuters that the Treasury Department is not “monitoring activity in the crypto market”:
We believe that the recent turmoil has only highlighted the urgent need for a regulatory framework that mitigates the risks posed by digital assets.
“We will continue to work closely with our regulatory partners as they act under existing authority and provide guidance and expertise as Congress considers legislation to further address these risks,” the official detailed.
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