It started with a crackdown on BlockFi, but now the war on digital currency lending is targeting other businesses. The latest is Celsius and it was the New Jersey authorities who once again unleashed a wave of coercive measures against him. Now Texas and Alabama have joined in, and Celsius could look to its final days of serving US users.
On Friday, the New Jersey Bureau of Securities ordered Celsius to suspend “the offer and sale of interest-bearing investments.” The order said Celsius, which is based in London, was financing its digital currency lending operations in part through the sale of unregistered securities. These illegal sales raised at least $ 14 billion for the company, the office said.
“If you sell securities in New Jersey, you must comply with New Jersey investor protection laws. Companies that deal with cryptocurrencies are not immune from surveillance, ”Acting Attorney General Andrew Bruck said.
The new cease-and-desist order against Celsius comes barely two months since New Jersey issued a similar order against BlockFi, yet another digital currency lender. As with the last one, the state accused BlockFi of allegedly selling unregistered titles.
And just like last time around, once New Jersey issued the first warning, other states lined up with similar orders against Celsius.
The Texas State Securities Board was the first to issue an official notice announcing a hearing on February 14, 2022 to determine whether the regulator should issue a cease-and-desist order against the company. The TSSB said Celsius offers interest-bearing accounts with advertised interest rates of 17.78%.
Alabama also issued a Celsius Justify Order. The Alabama Securities Commission wants to know why Celsius believes its proceeds do not constitute a sale of securities under state law, and it has given the company four weeks to respond. If it does not, the regulator will assume that it has waived its right to a hearing and will proceed with the imposition of sanctions.
A spokesperson for Celsius was quoted by a news outlet: “We are disappointed that these actions were filed and we strongly disagree with the allegations that Celsius did not comply with the law. We have always worked and will continue to work with regulators in the United States and around the world to operate in full compliance with the law. “
The spokesperson also assured users that services will remain uninterrupted for the time being, despite regulatory red flags.
Alex Mashinsky, founder and CEO of the company, said he looks forward to working with regulators to find the best way forward for the digital currency lending industry. He believes digital currency lending protocols are a boon to their users, as they democratize the gains wealthy investors have reaped.
“They should encourage us because we are effectively helping to redistribute wealth and provide opportunities for everyone, not just the 1%,” he said in a question-and-answer session.
1. To all @CelsiusNetwork clients, partners and ambassadors
Regarding the recent actions of the states of Texas, NJ and LA
We are disappointed that these actions were filed and strongly disagree with the allegations that Celsius did not comply with the law.
– Alex Mashinsky © ️ (@Mashinsky) September 17, 2021
However, it’s not just pure lending companies that regulators are attacking. As CoinGeek reported, the United States Securities and Exchange Commission (SEC) recently warned Coinbase that it would face enforcement action regarding its proposed Coinbase Lend product, which would result in the exchange would reduce its product launch plan.
In a blog post, the exchange, which is the largest in the United States and the first to be publicly traded on the Nasdaq, revealed that it had received a notice from Wells, which essentially lets a company know that the regulator is aware that she broke the law and that she is coming after that.
Watch: Pēteris Zilgalvis, Head of Unit, Digital Innovation and Blockchain at DG Connect, European Commission on Bitcoin Association Blockchain Policy Issues
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