Texas has Launched an Investigation into Celsius Network

Key Takeaways

  • The decision by crypto lender Celsius Network to cease customer redemptions  is being investigated by state securities regulators in Alabama, Kentucky, New Jersey, Texas, and Washington.
  • On Monday morning, authorities met and started researching the situation.
  • Due to the extreme market environment, Celsius has put a halt to withdrawals, swaps, and transfers between accounts.

Texas is opening an investigation into the cryptocurrency lending platform Celsius Network, The platform’s decision to suspend withdrawals, transfers, and swaps has raised concerns.

The cryptocurrency lending platform announced in a blog post that it would temporarily suspend withdrawals and its swap and transfer products on June 12, referencing “severe market circumstances.” Celsius stated that doing so would put them “in a better position to honor its withdrawal obligations over time.”

Other US jurisdictions have joined the investigation, including state securities regulators from Alabama, Kentucky, New Jersey, and Washington.

Speculations that the corporation was about to go bankrupt spread quickly on social media, causing massive market sell-offs.

According to Joseph Borg, the director of the Alabama Securities Commission, Celsius has been attentive to questions from regulators, but the investigation is still in its early stages.

Celsius has also been in contact with the Securities and Exchange Commission, according to Borg.

Authorities in Kentucky, New Jersey, and Texas issued a cease and desist order to Celsius in September. According to the officials, Celsius’s interest-bearing products must be registered as securities. BlockFi was fined $100 million by the SEC and state authorities in February for failing to register its cryptocurrency lending product.

Seeking comments from the securities regulators of New Jersey and Washington state were not immediately returned. The Kentucky Department of Financial Institutions stated that it is their policy not to comment on continuing enforcement actions and investigations.

Celsius was issued a cease and desist order by regulators in Kentucky, New Jersey, and Texas in September, claiming that its interest-bearing products should be registered as securities.

Celsius works similarly to a bank in that it accepts cryptocurrency deposits from retail clients and invests those funds in a market similar to the wholesale cryptocurrency market.

Celsius promises huge returns to retail customers, sometimes up to 18.6 percent per year. Individual investors have poured assets into Celsius and similar platforms due to the promise of large profits

The inquiry into Celsius’s freezing of customer accounts, according to Alabama Securities Commission Director Joe Borg, is a “new wrinkle” in an active investigation.

“We’ve been working with Celsius for a while.” “We’ve requested a lot more information, and they’re giving it to us.”

“We’ll continue our investigation into the company and whether or not we’re going to do the BlockFi model – whether they’re capable of it,” Borg said, referring to BlockFi’s $100 million settlement with the SEC and 32 states reached in February.

Youtuber Ben Armstrong confirmed on Twitter that he would sue Celsius and Alex in a class-action lawsuit. Celsius may now face additional legal challenges in addition to the ones he already faces. Ben claims to be one of the people who has been affected and says he will provide more details about the case in the coming days.

Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!


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