US State Regulator Warns About Crypto Interest-Bearing Accounts Amid Market Downturn

US State Regulator Warns About Crypto Interest-Bearing Accounts Amid Market Downturn

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. State Regulator Warns About Crypto Interest-Bearing Accounts

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.

This month, crypto lenders Celsius Network and Voyager Digital filed for bankruptcy protection. The Department of Financial Regulation of the U.S. State of Vermont said it “believes Celsius is deeply insolvent and lacks the assets and liquidity to honor its obligations to account holders and other creditors.”

Voyager CEO Stephen Ehrlich explained why his company filed for bankruptcy: “The prolonged volatility and contagion in the crypto markets over the past few months, and the default of Three Arrows Capital (‘3AC’) on a loan from the company’s subsidiary, Voyager Digital, LLC, require us to take deliberate and decisive action now.” Tags in this story Arizona, Arizona regulator, az, crypto Interest bearing accounts, cryptocurency interest-bearing accounts, cryptocurrency interest-bearing accounts

What do you think about the warning by the AZ financial regulator? Let us know in the comments section below. Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography. Report: South Korean Prosecutors Raid Home of Terraform Labs Co-Founder REGULATION | 15 hours ago SEC Criticized for How It Regulates Crypto — Chair Gensler Says Most Crypto Tokens "Have Attributes of Securities" REGULATION | 1 day ago

Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleXIDEN Blockchain Developer CryptoDATA Tech Announced as Official Title Sponsor of the MotoGP™ Austrian GP Next articleBitcoin, Ethereum Technical Analysis: BTC Falls Below $22,000 to Start the Week  Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItSEC Risks Violating Admin Procedure Act by Rejecting Spot Bitcoin ETFs, Says Grayscale

Grayscale Investments" CEO explains that the U.S. Securities and Exchange Commission (SEC) could potentially violate the Administrative Procedure Act by not approving a spot bitcoin exchange-traded fund (ETF). SEC Approving Spot Bitcoin ETF Is "a Matter of When and Not ... read more.UAE Airliner Emirates to Launch NFTs and Experiences in the Metaverse Interest in Real Estate Investments in Spain Grew 400%, With Some Using Crypto and Stocks as Payment Method Iran to Increase Penalties for Unauthorized Cryptocurrency Mining Economist Predicts the Fed"s Response to Inflation Will Push Crypto Higher