Five US states have launched a probe into Celsius' decision to suspend customer redemptions
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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.