U.S. state securities regulators investigate Celsius' suspension of user withdrawals

Securities regulators in five U.S. states are reportedly investigating cryptocurrency lending platform Celsius Network’s decision to suspend user withdrawals.

According to a Reuters report on Thursday, Joseph Rotunda, director of the Texas Securities Commission's enforcement division, said Alabama, Kentucky and Alabama were "suspending all withdrawals, exchanges and transfers between accounts" after Celsius announced it would "suspend all withdrawals, exchanges and transfers between accounts." Regulators in Washington, New Jersey, Texas and Washington began investigating the platform. Rotunda reportedly called the investigation a “priority” for Texas regulators and confirmed to Cointelegraph that law enforcement is “focusing on issues involving frozen accounts.”

“I am very concerned that clients — including many retail investors — may need immediate access to their assets, but be unable to withdraw funds from their accounts,” the enforcement chief reportedly said. “Not being able to access their investments could lead to serious financial consequences."

The report into a possible Celsius investigation follows a Wall Street Journal report on Thursday, citing people familiar with the matter, who said the two companies that backed the crypto lending platform during its November 2021 funding round do not intend to offer due to potential risks. additional funds. WestCap Group and Canadian pension fund Caisse de dépôt et placement du Québec led Celsius’ $750 million Series B round, helping the platform reach a $3.5 billion valuation.

Celsius has reportedly hired lawyers to look for different solutions to the financial challenges the company is currently facing as the cryptocurrency market experienced wild volatility in June. On Wednesday, the company's CEO Alex Mashinsky broke three days of social media silence on Twitter, saying the Celsius team was working "non-stop" to address user concerns.

The Texas Securities Commission also took action against Celsius in September 2021, initially scheduling a hearing related to allegations that the network offered and sold unregistered or licensed securities in the state, and that the platform did not Registered as a dealer under the Texas securities laws. The New Jersey Securities Authority issued a suspension order against Celsius, alleging that Celsius violated the state's securities laws.

Major cryptocurrencies including Bitcoin and Ethereum have fallen to nearly $20,000 and $1,000, respectively, amid extreme market volatility over the past seven days. Possibly in response to these losses, many cryptocurrency exchanges announced layoffs of 5%-20%, including Coinbase, Gemini, and Crypto.com.