Cryptocurrency lending platform Celsius Network has now received an emergency cease and desist order from Kentucky’s securities regulator over its “Earn Interest Accounts.”
On Thursday, Kentucky joined three other states, including Alabama, New Jersey, and Texas, that last week took similar actions.
The Kentucky Department of Financial Institutions has ordered the company to stop offering its interest-paying accounts in the state, calling the accounts “an unregulated market that represents an unprecedented risk to consumers.”
In its order, the regulator said, Celsius offers unregistered securities to its customers, which is in violation of state law. It further said that the company didn’t sufficiently disclose to customers what it did with their deposits.
The regulator also has issues with the language regarding interest earned on certain crypto accounts that Celsius calls “rewards” or a “financing fee.”
According to the order, Celsius can either request an emergency hearing to challenge the decision or appeal it in court.
Last week, in a live-streamed ask-me-anything (AMA), Celsius CEO Alex Mashinsky dismissed the company’s standoff with state watchdogs, saying he welcomes the chance to educate the US regulators.
“Any regulator who wants to learn more about what we do: we collaborate, cooperate and we don’t see any issues with that – the opposite.”
Mashinsky further said that regulators “should be cheering” for crypto lending service providers because “we’re effectively helping redistribute wealth and provide opportunity for everybody, not just the 1%,” before commenting, “regulators are here to protect consumers.”
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