The financial regulator of the U.S. state of Arizona has warned investors about crypto interest-bearing accounts. “Some companies may materially overstate the degree to which their collateral practices protect their ability to pay investors the stated return,” the regulator said.
The Arizona Corporation Commission issued an investor alert this week, warning about “digital asset financial services companies that offer interest-bearing crypto-asset accounts.”
The regulator explained: “With crypto-interest accounts, customers lend crypto assets to the company and, in exchange, receive interest paid in crypto assets.” The Arizona Corporation Commission elaborated:
However, due to the crypto market downturn, highlighted by the recent bankruptcy filings of Celsius Network and Voyager Digital, some companies are preventing account holders from withdrawing from and transferring between their accounts.
The securities regulator cautioned investors that “some crypto-interest account providers may not have adequately disclosed the risks that customers face when they deposit crypto assets onto these platforms,” adding:
Some companies may materially overstate the degree to which their collateral practices protect their ability to pay investors the stated return.
The commission recently took action against Blockfi Lending LLC and found that certain crypto-interest accounts were unregistered securities.
The regulator revealed that it is investigating whether other crypto-interest account providers are violating laws under its jurisdiction.
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