As part of its broad inquiry into firms paying yields on digital coin deposits, the SEC has thrown scrutiny at crypto lending platforms Celsius Network, Gemini Trust Co., and Voyager Digital Ltd. (TSX: VOYG), as the debate regarding whether or not their interest-bearing products should be registered with regulators heats up.

According to Bloomberg, which cited people familiar with the matter, the SEC has not accused the three virtual currency platforms of wrongdoing, but is examining their practice of generating high interest for customers in exchange for lending their tokens to other investors—and whether or not such offerings should be classified as securities.

The SEC’s inquiry casts a further shadow on the expanding crypto sector, which has been suffering from plummeting prices as of recent. Bitcoin is down almost 50% from November’s record-high, all while regulators crack down their enforcement actions against the practices of crypto exchanges. “We are one of many companies the SEC has reached out to regarding crypto yield products,” said Gemini spokesperson Carolyn Vadino to Bloomberg.

“It’s normal for financial services companies, digital asset related or otherwise, to be in ongoing dialog with regulators,” assured Voyager spokesperson Mike Legg. As cited by Bloomberg, crypto lenders have received over $40 billion worth of deposits from users, whom in turn have been paid substantial returns— anywhere between 3% to 18%. However, regulators argue that the crypto accounts’ principal is not federally insured, unlike bank deposits.

The crypto companies earn a premium when they lend the digital tokens to institutional investors at a higher rate, who then use the cryptocurrencies to make their own trades. But, given that the lending firms’ products are not registered with the SEC, regulators have expressed concern that possible risks are not fully made known to investors.

Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.