The most recent legal action against the Celsius Network by a U.S. state has attracted the eye of many crypto enthusiasts. The State of Kentucky has lodged a complaint against Celsius, a crypto lending service.
A state securities division ruling on Thursday called for the company to stop and desist from operating its “Earn Interest Accounts.”
States’ Disapproval for Interest Bearing Accounts
Kentucky disapproves of the startup’s wording on crypto accounts in which it refers to “rewards” or a “funding fee.” Celsius’ interest-bearing accounts are allegedly in violation of state securities legislation, failing to explain what happens to customers’ deposits, and state securities safeguards are not applied to consumers.
In any of these scenarios, Celsius Network may seek an emergency hearing to dispute the judgment, or it may appeal the decision through the courts. Another strike to the company that has already attracted the ire of Texas, Alabama, and New Jersey has now been dealt by Kentucky.
In an effort to thwart interest-earning cryptocurrency products, New Jersey has issued a cease and desist order, stopping the network from selling them in the state. According to the statement, Celsius is using sales of allegedly unlawful securities to finance its crypto lending and trading activities.
Action Taken Against Crypto Lending Firms
After issuing a similar ban in July, New Jersey followed suit today with a similar ban on another crypto lending company called BlockFi. Other loan businesses operating in New Jersey should take notice of the current trend.
Even last week, when asked about the financial issues Celsius’ loan firm has gotten itself into with state regulators, CEO Alex Mashinsky said on a live broadcast ask-me-anything that he is interested in educating the authorities about his company’s approach.