Six days ago, securities regulators in New Jersey and Texas cracked down on the Celsius cryptocurrency lending platform. 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 Celsius Cease-and-Desist Order
Four US states have an issue with the Celsius cryptocurrency lending platform and the company’s interest-bearing accounts. The same issues plagued crypto lender Blockfi as well, as several states sent orders to the company on its interest-bearing accounts. After New Jersey, Texas and Alabama cracked down on Celsius, Kentucky is now telling the company it must stop “soliciting or selling” its interest-bearing accounts to residents of Kentucky.
Similar to the rest of the state regulators of securities departments, the Kentucky regulator considers Celsius interest-bearing accounts to be securities. The cease and desist order reviewed by Bitcoin.com News notes:
The ministry has learned that the company is offering securities in the form of investment contracts in exchange for depositing assets with the company. These investment contracts allow passive investors to earn profits in the form of interest on assets deposited with the company and are considered securities within the meaning of the law.
Securities regulators believe users of interest-bearing crypto accounts “face additional risk”
Unlike Blockfi, the Celsius network has not used twitter or its blog channel to respond to claims from state regulators. While the co-founder of Celsius recently discussed issues with Facebook authentication methods, the Kentucky Cease and Desist Ordinance had not been discussed, at least at the time of writing. The Kentucky Securities Regulator believes “Celsius investors are subject to additional risk.”
All four states use similar arguments and claim that the same risks are involved with Celsius accounts. Blockfi has also had issues with regulators in New Jersey and Vermont, Texas, Alabama and Kentucky. Additionally, state securities regulators can crack down on other crypto platforms that offer interest-bearing digital currency accounts.
When a Bloomberg reporter reached out to Celsius for comment on Kentucky’s cease and desist order, the company did not respond. However, when the reporter contacted the company last week, a spokesperson for Celsius said the company “was disappointed that the shares had been filed and did not agree with the allegations.”
What do you think of the problems the Celsius network now has with Kentucky and three other state regulators? Let us know what you think of this topic in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. This is not a direct offer or the solicitation of an offer to buy or sell, nor a recommendation or endorsement of any product, service or business. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or allegedly caused by or in connection with the use of or reliance on any content, good or service mentioned in this article.