The US States took action against Celsius Network on Friday, accusing the company of giving people unregistered securities.
Celsius Network, one of the world's largest bitcoin lenders, was on the headlines when Texas and New Jersey started taking appropriate measures against cryptocurrency companies.
The attorney general of the state of New Jersey issued a cease-and-desist order on Friday, ordering the company to stop selling its products whereas Texas has requested a hearing to decide if a cease and desist order should be issued against the corporation. The hearing will take place on February 14th and Celsius will be given a chance to explain why it should not be ordered to stop selling its interest-bearing crypto accounts.
Celsius spokesperson stated: “We are disappointed these actions have been filed and wholeheartedly disagree with the allegations being made that Celsius has not complied with the law. We always have, and will continue to, work with regulators in the US and globally to operate in full compliance with the law.”
The Cryptocurrency lending platform is the largest interest account provider and digital currency lender with more than $24 billion in assets. Customers can earn nearly 9% on deposits of USD Coin and Tether, 6.2% on Bitcoin.
The company claims that they can pay such a high yield because they lend out the Crypto deposits at even higher rates to institutional investors, for carrying out their trades.
However, the policymakers regulators are quite skeptical about this as they speculate on the possible break of the law and said that the products, which sometimes are marketed as an alternative to bank savings accounts, should be registered before it's sold to the general public.
Andrew Black, Deputy Attorney General of the State, said on Friday, “Financial companies operating in the crypto market are in the spotlight.”
He adds, “If you sell securities in New Jersey, you must comply with New Jersey’s Investor Protection Act. Cryptocurrency firms are not affected by surveillance.”
CBW - External Analyst