Encryption companies Celsius, Voyager, Gemini face US SEC scrutiny
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Odaily Translator | Nian Yin Si Tang
, by Joe Light, Matt Robinson & Zeke Faux
Odaily Translator | Nian Yin Si Tang
The U.S. Securities and Exchange Commission (SEC) is scrutinizing cryptocurrency firms Celsius Network, Voyager Digital Ltd. and Gemini Trust Co. as part of a broad probe into companies offering interest-bearing products on virtual token deposits, according to people familiar with the matter. .
The SEC’s enforcement review focuses on whether the products offered by the companies should be registered as securities with the regulator, said the people, who were not authorized to speak publicly. The companies are able to pay customers higher interest rates than most bank savings accounts by lending the digital currency customers deposit to other investors. The SEC and several states, including New Jersey and Texas, said the practice raised concerns about investor protections.
The surveys have added to uncertainty for the fledgling industry of cryptocurrencies, which is currently undergoing a sell-off -- bitcoin plunged 50 percent from its all-time high earlier this month -- while a number of countries around the world are increasingly Pay attention to encryption regulation. Another crypto lender, BlockFi Inc., also faces SEC scrutiny, Bloomberg reported last year. Both Celsius and BlockFi were the subject of earlier enforcement actions by state securities regulators. The review is still ongoing, and the companies have challenged the allegations.
“We are one of many companies approached by the SEC regarding crypto yield products,” Gemini spokeswoman Carolyn Vadino said in a statement. “We are proactively cooperating with this industry-wide investigation.”
"All discussions with regulators are confidential," said Celsius spokeswoman Bethany Davis. "We have been cooperating with regulators in the US and globally in full compliance with the law and will continue to do so."
Mike Legg, a spokesman for Voyager, said the regulatory environment is rapidly evolving and “it is normal for financial services firms, whether related to digital assets or otherwise, to have ongoing dialogue with regulators.”
The SEC has not accused Gemini, Celsius or Voyager of any wrongdoing, and not all inquiries from regulators have resulted in enforcement action. A spokesman for the SEC declined to comment.
Crypto lenders say they have collected more than $40 billion in deposits. The accounts look a lot like traditional banking, where businesses take deposits and pay them interest. The difference is that many of these companies offer token deposits with interest rates ranging from 3% to 18%, paid in digital tokens, compared to the average yield of 0.06% for bank savings accounts. Unlike bank deposits, crypto accounts are not federally insured, meaning investors could lose their principal.Celsius, which has $18.1 billion in deposits, was incorporated in the U.K. in 2018, but said last year it would move its headquarters to the U.S. due to regulatory uncertainty. Last October,, WestCap and Caisse de dépôt et placement du Québec (CDPQ) led the round, with a post-money valuation of more than $3 billion. WestCap is a fund founded by former Airbnb and Blackstone executive Laurence Tosi; CDPQ is Canada's second-largest pension fund.
Celsius Completes $400 Million Equity Funding
, WestCap and Caisse de dépôt et placement du Québec (CDPQ) led the round, with a post-money valuation of more than $3 billion. WestCap is a fund founded by former Airbnb and Blackstone executive Laurence Tosi; CDPQ is Canada's second-largest pension fund.
Cryptocurrency exchange Gemini was founded in 2015 by brothers Cameron and Tyler Winklevoss. The company’s “Gemini Earn” crypto account pays up to 8.05% interest, which the company said it earned by working with third-party borrowers and reviewed its risks.
New York-based Voyager, which also runs an exchange, had $7 billion in assets under management as of November. The company, which is listed on the Toronto Stock Exchange, had a market capitalization of about C$1.7 billion ($1.35 billion) as of midday Wednesday.
