The U.S. Securities and Exchange Commission is scrutinizing the cryptocurrency companies Celsius Network, Gemini Trust and Voyager Digital about their practice of paying interest on crypto token deposits, Bloomberg.com reported on Thursday.
- The SEC has begun an enforcement review focused on whether these tokens are unregistered securities, the report states, citing unnamed sources familiar with the matter.
- The SEC has not accused any of the companies of wrongdoing, and an inquiry may not lead to charges. The three companies are cooperating with the SEC’s inquiry, Bloomberg reported. None responded to Forkast‘s request for comment.
- Celsius makes clear in its risk disclosure that “[t]he Tokens have not been, and are not intended to be, registered under the U.S. Securities Act…” and therefore may be at risk of losing value or becoming illiquid. The company also states, “Celsius does not intend or undertake to register the Tokens for trading on any securities exchange.”
- Voyager has a general risk disclosure that the crypto holdings could become worthless. Gemini does not have a risk disclosure linked from its home page.
- Cryptocurrency yield products have been gaining popularity with customers attracted by the higher yields offered compared to interest from saving accounts at traditional banks. But regulators in New Jersey and Texas are cracking down on such offerings in their states. In September, Coinbase canceled plans to launch a high-yield token after receiving notice that the SEC would sue if it proceeded.