Securities regulators from five US states have reportedly opened an investigation into crypto lending platform Celsius Network for its decision to suspend user withdrawals.

According to a Thursday report from Reuters, Texas State Securities Board enforcement division director Joseph Rotunda said regulators in Alabama, Kentucky, New Jersey, Texas and Washington began investigating Celsius after that the platform announced that it would “stop all withdrawals, exchanges and transfers between accounts.” Rotunda reportedly called the investigation a “priority” for the Texas regulator and confirmed to Cointelegraph that the enforcement division was “looking into the issue related to frozen accounts.”

“I am very concerned that clients, including many retail investors, need immediate access to their assets and are unable to withdraw money from their accounts,” the chief compliance officer said. “The inability to access your investment can have significant financial consequences. “

The report about a potential investigation into Celsius followed a Wall Street Journal report on Thursday that two companies that backed the crypto lending platform during a November 2021 funding round did not plan to provide additional funding due to potential risks, citing to people with knowledge of the situation. WestCap Group and Canadian pension fund Caisse de dépôt etplacement du Québec led a $750 million Series B funding round for Celsius, helping the platform reach a $3.5 billion valuation.

Since the crypto market experienced significant volatility in June, Celsius reportedly brought in lawyers to find different solutions to the current financial challenges facing the company. CEO Alex Mashinsky took to Twitter on Wednesday, breaking a three-day silence on social media, to say the Celsius team was working “non-stop” to address user concerns.

The Texas State Securities Board also took action against Celsius in September 2021, initially scheduling a hearing related to allegations that the network had offered and sold securities in the state that were not registered or permitted, in addition to the platform did not register as a dealer under the Texas Securities Act. The New Jersey Securities Bureau issued a cease and desist order against Celsius for similar alleged violations of the state’s securities laws.

Related: SEC Chairman Warns of ‘Too Good To Be True’ Yields Amid Market Downturn

Major cryptocurrencies including Bitcoin (BTC) and Ether (ETH) have dropped close to $20,000 and $1,000, respectively, in the past seven days amid extreme market volatility. Possibly in response to these losses, many cryptocurrency exchanges have announced 5% to 20% job cuts, including Coinbase, Gemini, and

Cointelegraph reached out to Celsius Network but did not receive a response at press time.

This post State Securities Regulators Investigate Celsius for Suspension of Withdrawals: Report

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