- An internal document shows that Eco lied about its yield-generating measures.
- It is being reported that Eco put user funds in Wyre, BlockFi, Genesis, and DeFi protocols.
- The company CEO has responded, calling these claims baseless.
According to the latest news report from Jason Mikula, the founder of Fintech Business Weekly, Eco, a consumer fintech product, has reportedly lied to its users regarding its yield-generating methods. The company had initially told users that they generated yield by lending USDC to institutions like Goldman Sachs and Fidelity. However, the recent review of the internal documents of the company has reportedly revealed deceptive behavior from Eco.
Mikula’s recent report on Eco also analyzed the internal chat logs, documentation, and call recordings. It was revealed that the company’s 2.5%–5% APY initially seemed too good to be true, as the internal chat revealed that even the co-founders debated lowering the APY. It was also reportedly identified that the company had used BlockFi for yield generation until late 2020 before moving to Wyre. However, none of this was ever disclosed to the consumers.
The report also highlights the fact that Eco was even unaware of whom BlockFi was lending funds to. Later, it came to light that BlockFi was lending customer funds to FTX, Alameda Research, and Three Arrows Capital. All of these three entities are now sunken ships.
Fundamentally, the report states that Eco lied to its customers that the money was being lent to Goldman Sach and Fidelity; instead, it went to BlockFi. Mikula also mentioned that Eco would earn 8.6% on these funds, pass along 2.5–5% to users, and keep the rest for itself. The detailed report also looks into various other deceptive behaviors by ECO and unfolds them one by one.
Andy Bromberg, the CEO of Eco has responded to the allegations and replied to Mikula’s tweet. Bromberg stated that the report is filled with inaccuracies and addressed that Mikula was not interested in the truth. Bromberg clarified that Eco never put user funds with BlockFi, Genesis, or DeFi protocols. He also mentioned that they never explicitly told that Eco was lending to Goldman Sachs or Fidelity. He also added that their relationship with Wyre ended in May 2022. Bromberg also promised to come up with a complete response to these claims.
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