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As regulators crack down on issuers of digital asset lending products, authorities in New Jersey and Texas are taking action against cryptocurrency group Celsius Network for allegedly offering unregistered securities.
Office of the Attorney General of New Jersey, U.S. Friday order The company stopped issuing interest-bearing cryptocurrency products through a suspension order.Texas regulator submitted a Notice Seek to hold a hearing in February to assess whether to take similar actions.
Both argued that the company’s interest-bearing encrypted account (called Celsius Earn) constituted an unregistered securities offering.
The New Jersey regulator added that the company has been “at least partially funding its cryptocurrency lending business and proprietary trading” by selling these unregistered securities, and said it has raised more than $14 billion for the city-based Celsius. Hoboken, New Jersey.
“Financial companies operating in the cryptocurrency market have received attention,” the state’s acting attorney general Andrew Brooke said on Friday. “If you sell securities in New Jersey, you need to comply with New Jersey’s investor protection laws. Companies that trade in cryptocurrencies are not immune to supervision.”
Encryption platforms that are interested in digital assets include Popularity is on the rise Because it provides considerable benefits. Celsius is one of the largest lenders with more than 100,000 interest-bearing accounts in the United States. It advertises that the annual interest rate on deposits of digital currencies and other tokens linked to the U.S. dollar is 8.8%.
Crypto lending products are now facing Regulatory backlash. Institutions in five states-Alabama, Kentucky, New Jersey, Texas, and Vermont-are seeking similar Action against BlockFi, A lending group, raised $14.7 billion by providing interest-bearing encrypted accounts. BlockFi denied these claims.
Coinbase, the largest U.S. cryptocurrency platform, revealed last week that the U.S. Securities and Exchange Commission has Warned that the company would be sued If it continues to launch its own new digital asset income product Lend’s plan.
At the same time, the chairman of the US Securities and Exchange Commission Gary Gensler told the Senate committee on Tuesday that the crypto market lacks adequate consumer protection, “especially loans”, because the momentum of the two parties to strengthen industry supervision is increasing.
State and federal regulators believe that these encrypted lending products can be defined as “investment contracts,” making them a type of securities, and requiring the issuer to formally register and release additional information.
But many in the crypto community deny this explanation, believing that regulators have Fails to provide sufficient clarity On this matter.
In an interview with the Financial Times last week, Celsius CEO Alex Mashinsky stated that he was “very confident” that none of Celsius’ products in the United States were securities. Celsius did not immediately respond to a request for comment on Friday.
Celsius has historically been based in the United Kingdom, but in June it Said It relocated its main business activities and headquarters to the United States, and “where applicable, to several other jurisdictions.”
The Texas Securities Commission stated that it notified Celsius in May that it may have violated state securities laws and explained legal requirements. The board stated that Celsius did not stop offering its loan products after receiving the warning.
Celsius has stated that it generates cryptographic revenue through loans and cryptocurrency mining, but state regulators have stated that the company also engages in proprietary trading and other types of transactions.
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