Securities regulators in a number of U.S. states are looking into crypto lender Celsius Network’s decision to pause customer redemptions, Reuters reported Thursday (June 16).
According to Joseph Rotunda, enforcement director at the Texas State Securities Board, state regulators from Alabama, Kentucky, New Jersey, Texas and Washington are looking into this.
Celsius has said it will be pausing withdrawals, swaps and transfers between accounts, so it can be “in a better position” to honor withdrawal obligations.
Rotunda reportedly learned of Celsius’ move from a blog post on Sunday night. The blog said the company wanted to do this to “stabilize liquidity.”
Rotunda said this was a “priority” and said he was concerned “that clients — including many retail investors — may need to immediately access their assets yet are unable to withdraw from their accounts.”
“The inability to access their investment may result in significant financial consequences,” he said.
Celsius works like a bank does, gathering crypto deposits from retail customers, then investing them in what amounts to the wholesale crypto market. That includes DeFi sites which use blockchain tech to offer various services. It offered annual returns as high as 18.6%.
In September, securities regulators in Texas, New Jersey and Kentucky ordered Celsius to cease, arguing the company was trading in unregistered securities.
See also: Kentucky Bars Crypto Firm Celsius From Offering Accounts
PYMNTS wrote that Celsius’s decision came as Bitcoin was plummeting, having lost more than 10% of its value and hitting its lowest level since December 2020.
It was sitting at $24,500 on Monday (June 13) and there had been a $150 million selloff of crypto.
Celsius’ decision to pause withdrawals for customers made investors nervous. The losses were a part of the overall economic turmoil, with inflation still going on as well as interest rate increases planned by the U.S. Federal Reserve.
The Nasdaq was falling, too, with investors selling off many tech-related stocks — this is often bad news for Bitcoin’s value and that of other cryptocurrencies.
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