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US SEC investigates crypto firms for offering lending products.

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US SEC investigates crypto firms for offering lending products.

According to the Bloomberg report, the United States Securities and Exchange Commission (SEC) is scrutinizing three crypto companies, Celsius Network, Voyager Digital, and Gemini Trust, as a part of a broader investigation against cryptocurrency lending platforms. The report detailed that the investigation of the regulator is focused on checking if the crypto lending companies should register their offerings as securities, citing anonymous sources. 

The US SEC did not accuse the companies of any wrongdoings or brought charges yet. 

Crypto lending companies mostly operate more like commercial banks: they take cryptocurrencies of customers as deposits and offer interest on them. These lending companies then loan these deposited cryptocurrencies to institutions to cover their crypto trading positions. Though the crypto lending companies are facing a federal investigation now, several U.S. state regulators have already moved against them for violating state securities laws. New Jersey, Texas, Alabama, Kentucky, and a few other states brought enforcement actions against Celsius and BlockFi and even threatened to block their business. However, the US SEC did not accuse any of these firms of any wrongdoing or brought charges against them yet. 

The securities regulator did not officially confirm its latest probe. 

SEC did not officially confirm its latest probe, but all of the three companies have said that they are cooperating with the regulator. “We are one of many companies the SEC has reached out to regarding crypto yield products,” a Gemini spokesperson told the publication. “We are cooperating voluntarily with this industry-wide inquiry.” “All discussions with regulators are confidential,” Celsius’ Bethany Davis added. “We always have, and will continue to, work with regulators in the U.S. and globally to operate in full compliance with the law.” 

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