Six days ago, the securities regulators from New Jersey and Texas cracked down on the cryptocurrency lending platform Celsius. Additionally, the Alabama Securities Commission joined in and filed a cease and desist order against Celsius. Now the state of Kentucky is following suit and has filed a cease and desist order against the crypto lending platform.
Kentucky Sends Cease and Desist Order to Celsius
Four states in the U.S. have an issue with the cryptocurrency lending platform Celsius and the company’s interest-earning accounts. The same issues have affected the crypto lender Blockfi as well, as multiple states sent orders to the company over its interest-bearing accounts. After New Jersey, Texas, and Alabama cracked down on Celsius, Kentucky is now telling the firm it needs to stop “soliciting or selling” its interest-bearing accounts to Kentucky residents.
Similar to the rest of the state regulators from securities departments, Kentucky’s regulator believes the Celsius interest-bearing accounts are securities. The cease and desist order reviewed by Bitcoin.com News notes:
The department has become aware that the company is offering securities in the form of investment contracts in exchange for the deposit of assets with the company. These investment contracts allow passive investors to earn profit in the form of interest on the assets deposited with the company, and qualify as securities under the Act.
Securities Watchdogs Believe Crypto Interest Bearing Account Users ‘Are Subject to Additional Risks’
Unlike Blockfi, the Celsius Network has not used Twitter or its blog channel to address the allegations from state regulators. While the co-founder of Celsius recently discussed issues with Facebook authentication methods, the Kentucky cease and desist order had not been brought up, at least at the time of writing. Kentucky’s securities watchdog believes “Celsius investors are subject to additional risks.”
All four states are using similar arguments and claim the same risks are involved with Celsius accounts. Blockfi also had issues with regulators in New Jersey and Vermont, Texas, Alabama, and Kentucky. Moreover, state securities regulators may crack down on other crypto platforms that offer digital currency accounts that bear interest.
When a Bloomberg reporter reached out to Celsius for comments about Kentucky’s cease and desist order, the firm did not respond back. However, when the reporter contacted the firm last week, a Celsius spokesperson said the firm “was disappointed that the actions had been filed and disagreed with the allegations.”
What do you think about the issues the Celsius Network now has with Kentucky and three other state regulators? Let us know what you think about this subject in the comments section below.