Thailand’s Securities and Exchange Commission (SEC) warns investors of the risks posed by DeFi transactions. The SEC believes that this altcoin ecosystem, especially lending platforms; He claimed that he may not include the necessary parameters in his mechanisms to ensure the prevention of rug pull and over-leveraged collateral. This is why he talked about the risk of users becoming vulnerable. Here are the details…
Cybercriminals target altcoin investors
The cryptocurrency space and Blockchain have seen significant growth in recent years. However, as the crypto space has become the favorite choice of cybercriminals, there have been shocking events such as the Terra crash. Therefore, various global regulators are warning investors. In line with the Thai SEC’s statements on Wednesday, authorities described DeFi transactions as risky. They said that these platforms may lack mechanisms that ensure the efficiency of the system. Authorities used the following statements:
Investors are therefore advised to review the DeFi program before joining… because lending and lending services are not regulated by financial and capital market regulators in Thailand.
In decentralized finance (DeFi), financial decisions are made by the mechanism implemented through the fulfillment of certain terms and conditions. Therefore, it does not involve any third party to control the system. SEC representatives cited the risks involved in DeFi projects. He stated that loan projects may exceed collateral. He added that users may not receive their cash back and expected return on investment (ROI). You can see the biggest altcoin projects in the DeFi field, which the authorities pointed out, in the list below:
SEC considers smart contracts of DeFi projects more sensitive
According to the SEC’s findings, the technical and security risks in DeFi projects make them more vulnerable. For example, project management can get away with investors’ money, making a project’s local currency worthless to buyers. In fact, this situation is called “rugpull”. However, the expectation of high returns attracts investors without showing the risks. For this reason, investors are advised to review any DeFi program before joining the program. Notably, the Thai commission began alerting investors after two DeFi platforms recently stopped withdrawals.
As we reported as Kriptokoin.com, Zipmex made a statement on July 21. It announced that it has stopped withdrawing funds from its subsidiaries in Thailand and Singapore. Blockchain research firm Chainalysis has also released a report on criminal activities targeting the crypto industry. The report revealed that by May 2022, 97% of the total assets stolen belonged to DeFi. Considering the increased risks, the SEC also noted that they are in the process of reviewing regulatory guidelines for cryptocurrencies.
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