Texas & New Jersey Regulators Acts Against Celcius Network’s Unregistered Products

SNIPPETS

  • Texas, New Jersey, and Alabama have taken action against cryptocurrency lending accounts.
  • Celsius Network is one of the most well-known cryptocurrency lending companies.

The United States took action against Celsius Network on Friday, accusing the company of offering residents unregistered securities.

Celsius Network claims to be one of the world’s largest cryptocurrency lenders. Texas has requested a hearing to decide if a cease and desist order should be issued against the corporation.

As a result of the action, Celsius will have to demonstrate why it should not be ordered to stop selling its products to inhabitants of the state. The hearing will take place on February 14th.

New Jersey later ordered Celsius to stop providing some of its products, which it also labelled as unregistered securities, on November 1st.

Celsius has 28 days to justify why it should not be prevented from marketing its products, according to an Alabama ruling posted on its securities agency’s website on Friday but dated Thursday.

CEO Alex Mashinsky showed his temperament over the filed charges and stated in a interview that,

“We welcomes the chance to educate U.S. securities regulators. They should be cheering for us as we’re effectively helping redistribute wealth and provide opportunity for everybody, not just the 1%.”

As a follow-up to states like New Jersey and Texas taking similar actions against BlockFi Inc.

In July and in the week following the disclosure by Coinbase Global Inc. that the Securities and Exchange Commission had threatened to sue it if it offered its own yield product to depositors, the states are now taking similar actions against Celsius.

In a series of tweet, Mashinsky elaborated the situation to the Celsius network peers and thanked all of them for standing and co-operating along with him and the blockchain network.

In the next tweet addressing US SEC and mentioned that the network has always worked with the regulation and guidelines provided by the SEC.

CELSIUS NETWORK LENDS HIGH YIELD DEPOSITS

Celsius and other crypto interest account providers have stated that they are able to pay such high yields in part because they lend the deposits out at even higher rates to institutional investors who need to borrow crypto to execute their own trades, such as shorting the market or engaging in arbitrage.

However, federal and state securities regulators have stated that the companies are likely breaking the law and that the products, which are sometimes offered as a substitute for bank savings accounts, should be registered with their respective agency.

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