Texas securities regulator to conduct probe in Celsius' withdrawal suspension
Five US states have launched a probe into Celsius' decision to suspend customer redemptions
By Shashank Bhardwaj
Joseph Rotunda, the enforcement director at the Texas State Securities Board, informed that five States in the US, namely, Alabama, New Jersey, Washington, Texas and Kentucky, are investigating crypto lender Celsius Network's decision to suspend customer redemptions, which came in this week.
On June 13, Celsius said it was pausing withdrawals, transfers and swaps between accounts due to extreme market conditions. The company mentioned that this would put them "in a better position to honour, over time, its withdrawal obligations."
Rotunda said, "I am very concerned that clients – including many retail investors – may need to immediately access their assets yet are unable to withdraw from their accounts. The inability to access their investment may result in significant financial consequences."
Like any bank, Celsius collects the crypto deposits from customers and invests them in the equivalent of the wholesale crypto market. It promises its retail customers big returns, as high as 18.6 percent annually. This lucrative opportunity to earn huge profits has led investors to pour their assets into Celsius.
In September 2021, the Texas State Securities Board initiated action against Celsius, initially setting up a hearing to address charges that the network had marketed and sold securities in the state that were not registered or permitted.
Joseph Borg, the Securities Commission Director of Alabama, stated that Alabama, Texas, New Jersey, and Kentucky security regulators were also probing the matter. He said that Celsius has been responsive to the regulators, but the investigation is still in its initial stages. He added that the US Securities and Exchange Commission has also been in talks with Celsius. The SEC, however, declined to comment.
Major cryptos like Bitcoin and Ether have seen a massive dip in their prices following the latest market crash and are now trading at $20,000 and $1000, respectively. To navigate this tricky landscape, Celsius has onboarded attorneys to find solutions to the company's current challenges. CEO Alex Mashinsky stated that the team was working "non-stop" to address its users' concerns.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash