Celsius has received a cease and desist order from the Securities Division of the Kentucky Department of Financial Institutions regarding its interest-earning crypto accounts.
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The ordinance claims that Celsius is engaged in securities-related activities.
âThe Department is aware that the Company offers securities in the form of investment contracts in exchange for depositing assets with the Company. These investment contracts allow passive investors to earn profits in the form of interest on assets deposited with the company. “, describes the command.
It comes amid a broader crackdown on cryptocurrency borrowing and lending companies. Just seven days ago, Celsius was ordered to stop offering interest-bearing accounts in New Jersey and Texas.
Celsius is not the only company to have faced this crackdown. In July, BlockFi was charged with selling securities in the state of Alabama and ordered to stop offering its paid accounts in New Jersey.
In arguably the strongest crackdown on crypto borrowing and lending firms, Coinbase received a well notice from the SEC that was likely related to its lending program that was about to be launched. The Lend program reportedly offered products similar to those of BlockFi and Celsius.
About a week after Coinbase’s release, the Wells notice from the SEC Coinbase announced that it would no longer seek to offer its lending program.
So far, it is not clear how this situation will develop. BlockFi has received several extensions from the State of New Jersey for its offering of in-state interest accounts, showing that there is at least some debate on whether these offers are indeed securities.