Thai SEC warns investors about DeFi risks

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Securities and Exchange Commission(SEC) Thailand warned investors about the high risks in the DeFi sector, and also reminded that regulators do not actually control this industry.

SEC of Thailand recommended crypto investorsto be cautious with decentralized finance (DeFi) transactions, calling them risky. The regulator said local regulators have virtually no oversight of this young and fast-growing industry.

The DeFi industry has become popular in the country,especially deposit-taking and lending services. However, as the SEC stated, these services are risky because the transaction control mechanism to ensure compliance with the terms in smart contracts may not be present on DeFi platforms.

“Investors are advised to review anyDeFi program before joining it because deposit-taking and lending services are not regulated by financial and capital market regulators in Thailand,” the SEC said.

The regulator also noted that excessivethe use of collateral and lack of accurate operational information regarding terms, conditions and features may expose investors to risk. DeFi platforms attract investors with high returns, but there are also hidden risks, including the possibility of fraud.

Formerly Thai cryptocurrency exchange Zipmexsuspended the withdrawal of funds from the platform. After this, the SEC of Thailand launched a hotline for exchange clients. The Singapore High Court recently granted Zipmex relief from claims and creditor claims for three months.

In May, analytics firm Chainalysis published a report showing that of the $1.7 billion stolen in digital assets from the start of the year through May, 97% was DeFi.