Celsius Network, a cryptocurrency lending company, is part of a recent wave of crypto companies bolstering their legal departments with hires from corporate law firms. Celsius Networks is looking to expand its financial services and has recruited Ron Deutsch as general counsel.
Built with a mission to increase access to financial services, the blockchain-based platform is free. Celsius Network offers a compound return service. The company also offers easily accessible low-cost loans to hundreds of thousands of customers. Users can deposit cryptocurrencies like Bitcoin and Ethereum into their Celsius virtual wallet.
In-house counsel takes on the legal challenges of crypto
Mr. Deutsch was previously a mergers and acquisitions lawyer with the New York law firm Paul Weiss. Celsius Network has also hired a number of other in-house lawyers from Paul Weiss.
“Ron brings to Celsius the perfect combination of high-caliber legal and business skills and experience, and a passion for entrepreneurship and the crypto industry,” said company CEO Alex Mashinksty. “Ron is just another example of how Celsius is adding experts from every industry who are committed to doing well, then doing well, to help us realize our vision with the best in the business.”
The origin and growth of the company
Mr Mashinksty founded Celsius Network in 2018. Although originally based in the UK, the company moved its headquarters to the US due to regulatory uncertainty. Celsius Network is currently a private company.
With more than $20 billion in deposits, Celsius has garnered investor enthusiasm. Celsius has over 2 million members in the community and has processed $8.2 billion in loans. The company has more than 200 employees worldwide, working from offices in New Jersey, London, Tel Aviv, Cyprus and Serbia.
In November 2021, Celsius Network raised $400 million in an equity funding round. The Series B round of financing was led by Caisse de Dépôt et Placement du Québec, the second largest pension fund in Canada. As a result, the crypto lending platform has a valuation of over $3 billion.
Its low-cost, high-interest loan business model has propelled the company’s growth. Among his most recent projects is CelsiusX, which seeks to bridge centralized finance and decentralized finance, or DeFi.
The Biden administration has indicated that it intends to issue an executive order in the first half of 2022 outlining the government’s approach to crypto regulation. The directive would instruct certain federal agencies to assess the risks and opportunities associated with cryptocurrencies, stablecoinsand non-fungible tokens.
Celsius network Part of SEC probe
Crypto lending companies are under the supervision of the Securities and Exchange Commission (SEC). High-yield products offered by crypto platforms with lending services, such as Celsius Network, Voyager Digital and Gemini Trust, are part of an SEC probe.
The SEC focuses on the high rates companies pay customers. In order to pay higher rates than a typical bank savings account, companies lend digital tokens to institutional investors.
Crypto loan accounts are not federally insured, unlike traditional bank accounts. This means that investors can lose the principal amount they deposited.
Celsius Network did not provide public details about the SEC’s enforcement review. “All discussions with regulators are confidential,” said Bethany Davis, spokesperson for Celsius Network. “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 New York companies Voyager Digital and Gemini Trust are also in constant dialogue with regulators.
State-level threats against Celsius Network
Beyond the SEC’s federal investigation, state officials from Alabama, Kentucky, New Jersey, Texas, Washington and Vermont have filed lawsuits. These regulators have threatened to ban Celsius Network from doing business in their states.
Since crypto borrowing and lending uses decentralized blockchain technology, some argue that this makes it more transparent and tamper-proof. Moreover, unlike fiat-denominated loancrypto-denominated loans are not dependent on a central bank or sovereign nation.
Is cryptocurrency a path to financial independence?
CEO Alex Mashinsky sees investing in cryptocurrency as a path to financial independence, especially for young investors. “If you’re 69 and you’re retiring next year and you’re going to need that money, obviously that’s not a good idea,” Mashinsky said. “But if you’re in your 20s and projecting 20 or 30, then you should have a bigger allowance.”