Regulators Are Now Probing Celsius Over Account Freezes

By Kevin • June 19, 2022 4:08 pm • Comments

The SEC and other state securities regulators are now reportedly investigating crypto lender Celsius Network which made news recently for its account freezes which prevented users from withdrawing their assets.

The investigators are saying that this is a priority as it has the potential to result in significant financial consequences for the network’s users as well as a further impact on the markets.

The withdrawal freeze announcement was revealed by Celsius last Sunday night and there has already been a lot of buzz on what the users should do to protect their assets.

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The company is stating that the reason for the withdrawal pauses is due to the ” extreme market conditions” which leaves a lot of open questions and concerns on whether or not the company will be able to meet its obligations.

Bitcoin.com reports:

“Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, swaps, and transfers between accounts,” the company wrote.

Alabama Securities Commission Director Joseph Borg told the publication that the SEC has also been in communication with Celsius, adding that the crypto lender has been responsive to questions from the regulators.

Last year, regulators in a number of states, including Alabama, Kentucky, New Jersey, and Texas hit Celsius with a cease and desist order over the lender’s interest-bearing products, which they said should be registered as a security.

After freezing withdrawals, Celsius reportedly sought help from Akin Gump Strauss Hauer & Feld, a law firm that specializes in financial restructuring. The crypto lender is also reportedly hiring Citigroup as an advisor.

Apparently, the SEC has already been in communication with Celsius Network, but has not yet commented on their situation or what actions will be taken.

The regulators come from a variety of different states including Alabama, Kentucky, New Jersey, Texas and Washington.

As many are still waiting for the freezes to be removed, it seems that some are already taking action such as Ben Armstrong.

Armstrong, also known as Bit Boy, has announced a class action lawsuit against Celsius Network which further puts more pressure on the current case.

Reuters reports:

Alabama Securities Commission Director Joseph Borg also told Reuters that Alabama, Texas, New Jersey and Kentucky securities regulators were probing the matter.

Celsius has been responsive to questions from the regulators, but that the investigation is in the initial stages, he said.
The SEC declined to comment.

The New Jersey and Washington state securities regulators did not immediately respond to requests for comment.

A spokesperson for the Kentucky Department of Financial Institutions said it was their policy to not comment on ongoing enforcement actions and investigations.

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