Kentucky's securities regulator, the Kentucky Department of Financial Institutions, took action against cryptocurrency lender Celsius Network (CRYPTO: CEL) by issuing a cease and desist order.
See Also: CELSIUS NETWORK REVIEW
ENTER TO WIN $500 IN STOCK OR CRYPTO
Enter your email and you'll also get Benzinga's ultimate morning update AND a free $30 gift card and more!
What Happened: In Thursday's emergency order, the regulator said Celsius Network offered its customers unregistered securities and was not transparent enough about what is done with customer deposits.
The regulator described the interest-bearing accounts that the firm offered as “an unregulated market that represents an unprecedented risk to consumers.”
The Kentucky Department of Financial Institutions said that Celsius can request an emergency hearing to challenge the ruling or appeal it in a court of law. The order follows similar actions recently taken by regulators in Texas, Alabama and New Jersey.
Celsius claims to be managing billions in digital asset deposits and paying high interest to those who provided those funds. Stablecoins deposited on the platform often offer two-digit yearly percentage yields.
Such services have recently received intense scrutiny from securities regulators, with actions taken also against competitor BlockFi.
See Also: BLOCKFI VS. CELSIUS
Earlier this month, Coinbase Inc. (NASDAQ:COIN) decided to drop its plans to launch a cryptocurrency lending and yield account service of its own after the Securities and Exchange Commission threatened to sue if such a product was launched.
Price Action: According to CoinMarketCap data, Celsius Network's CEL token — which provides access to higher yields — is trading at $4.99 Saturday after losing 1.01% over 24 hours.