Eco's Yield-Generating Claims Under Scrutiny

Allegations Against Eco

Recent revelations have put Eco, a consumer fintech product, in a challenging position as it faces allegations of misleading its users about its yield-generating methods. The company is accused of falsely claiming that it lent funds to prestigious institutions like Goldman Sachs and Fidelity, while actually using platforms like BlockFi, Wyre, Genesis, and various DeFi protocols.

Internal Document Exposé

An internal document review revealed that Eco's advertised 2.5%–5% annual percentage yield (APY) appeared too promising. Internal discussions among Eco's co-founders even considered lowering this rate. It was discovered that Eco had utilized BlockFi for yield generation until late 2020 before transitioning to Wyre. Crucially, these actions were not communicated to users.

Eco's Alleged Practices

The investigation highlighted that Eco was unaware of BlockFi’s lending activities, which involved risky entities like FTX, Alameda Research, and Three Arrows Capital, all of which have now failed. The report also alleges that Eco earned 8.6% from its lending activities, sharing only a portion with users and retaining the rest.

CEO's Response

In response to these allegations, Eco's CEO, Andy Bromberg, contested the claims, labeling the report as inaccurate. He asserted that Eco never placed user funds with BlockFi, Genesis, or DeFi protocols and clarified that they did not explicitly claim to lend to Goldman Sachs or Fidelity. Bromberg also noted that Eco's relationship with Wyre ended in May 2022 and promised a comprehensive response to the allegations.

These developments have raised significant concerns about transparency and trust in fintech operations, with users and stakeholders keenly awaiting further clarifications and responses from Eco.