According to the most recent news report from Jason Mikula, the publisher of Fintech Business Weekly, Eco, a consumer fintech firm, has allegedly deceived its consumers about its yield-generating processes. Initially, the firm assured consumers that it produced income by lending USDC to institutions like Goldman Sachs and Fidelity. Nevertheless, a recent study of the company’s internal papers allegedly uncovered fraudulent activity by Eco.
Eco’s Failure to Communicate APY Changes
Mikula’s latest Eco report also examined internal chat logs, documentation, and phone recordings. The company’s 2.5%-5% APY first seemed too good to be true since internal discussion indicated that even the co-founders considered decreasing the APY. It was also stated that the corporation employed BlockFi for yield generation till late 2020 before switching to Wyre. Yet, this was never communicated to customers.
According to the investigation, Eco had yet to learn to who BlockFi was lending money to. Eventually, it was revealed that BlockFi was lending consumer cash to FTX, Alameda Research, and Three Arrows Capital. These three entities are now all sinking ships.
Revealing Eco’s Hidden Agenda
The study claims that Eco misled its clients into believing that the money was going to Goldman Sachs and Fidelity while it was going to BlockFi. Mikula said that Eco would make 8.6% on this money, pass 2.5-5% on to users, and retain the rest. The exhaustive research also investigates and unravels ECO’s other misleading activities individually.
Andy Bromberg, the CEO of Eco, has reacted to the charges and Mikula’s tweet. Bromberg remarked that the report is riddled with falsehoods and that Mikula was uninterested in the truth. Bromberg explained that Eco never used the BlockFi, Genesis, or DeFi protocols to store customer payments. He further said they should have been informed explicitly that Eco was financing Goldman Sachs or Fidelity. He also said that their partnership with Wyre will cease in May 2022. Bromberg also pledged to provide a comprehensive answer to these allegations.
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