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Urges crypto investors to be more cautious
: SEC chief
Gary Gensler
Photo:
Jonathan Ernst / REUTERS
His critical attitude towards digital currencies is well known.
Gary Gensler
(
64), Chairman of the US Securities and Exchange Commission (SEC), has described the crypto market as the "wild west".
Now he made negative comments again – Gensler warned investors in the crypto market against the Reuters news agency not to rely on promises of returns that are too high, especially from crypto lending platforms.
Such high return promises are a warning sign for Gensler to become skeptical.
"If it seems too good to be true, it may be too good to be true," the SEC chief said at an industry event.
In the cybercurrency market, investors were recently concerned about the difficulties of Celsius Networks, a provider of cryptocurrency loans.
Celsius had said it was suspending withdrawals and inter-account transfers to stabilize liquidity and operations.
The company lends digital money, provides cryptocurrency-backed loans, and offers savings products to customers who invest their cybercurrencies with the company.
The company even advertises annual returns of up to 17 percent on its website.
Bitcoin, the world's largest cryptocurrency, then plummeted in double digits, falling to an 18-month low at 17,666.
In November 2021, the cyber currency was still trading at just under 69,000 US dollars.
The market feared that other companies in the industry would be sucked into the abyss.
One problem is that companies like Celsius operate in a gray area, unlike classic banks, they are not subject to any clear regulation with corresponding disclosure requirements.
layoffs of thousands of employees
Since Gensler took over as chairman of the US Securities and Exchange Commission in April 2021, efforts to regulate the crypto market have intensified.
Gensler is considered an expert in digital currencies and would like to expand investor protection in this area as well.
At the beginning of the year, the crypto lending platform Blockfi had to pay a fine of 100 million US dollars.
Recently, several companies in the industry had announced that thousands of employees would be laid off.
Against this background, investors had also sold stocks from the cryptocurrency sector and from companies dealing with the blockchain technology underlying cybercurrencies.
hr/Reuters