Texas and New Jersey regulators are behind Celsius Network

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The Texas State Securities Board has filed a hearing with the possibility of imposing a cessation and withdrawal order against the credit firm Celsius Network for not offering licensed securities at the state or federal level, while the New Jersey Securities and Exchange Commission has ordered the platform to: stop offering and selling interest-generating cryptocurrency products.

According to a statement filed Sept. 17, the Texas regulator will hold a hearing related to allegations that Celsius Network offers and sells securities in Texas that are not registered or permitted, in addition to not registering as a distributor according to the Securities State Act. If the judge agrees that the platform’s bids represented unlicensed securities, Celsius Network may be subject to a cessation order.

On the same day, the New Jersey Securities and Exchange Office announced that it had issued a cessation order against Celsius for allegedly “financing its cryptocurrency lending operations and proprietary trading, at least in part, through the sale of unregistered securities. in violation of the New Jersey Securities Act. “According to the state regulator, the platform raised approximately $ 14 billion for these sales.

“Financial companies operating in the cryptocurrency market are on alert,” said New Jersey Acting Attorney General Andrew Bruck. “If you sell securities in New Jersey, you must comply with New Jersey investor protection laws. Companies that work in cryptocurrencies are not immune to supervision.

The view in Texas will be done online or in person on February 14th. Should the judge grant a cessation and cessation order, he would probably have to leave Celsius Network and its affiliates Celsius Network Limited, Celsius US Holding and Celsius Lending. offering cryptographic services in Texas without registering with the state securities board or the U.S. Securities and Exchange Commission.

According to the Texas filing, Celsius had more than $ 24 billion in digital assets on Sept. 3, making the company one of the largest in decentralized financing. Its holdings have grown more than 2,300% since June 2020, when it reported $ 1 billion in digital assets. In Texas, Celsius Network has more than $ 344 million in assets managed by more than 9,000 local residents and businesses on June 9th.

The Texas Enforcement Division of the State Securities Board notified Celsius on May 14 that it may not be complying with the State Securities Act. In a filing filed Sept. 17, he alleged that the platform’s interest-bearing accounts violated section 4.A of the Securities Act, saying they constituted “investment contracts, notes or evidence of regulated debt. as values ​​”.

Related: The Texas regulator allows state-contracted banks to keep Bitcoin

The allegations against Celsius are similar to those the two state regulators, as well as their colleagues in Alabama, imposed against the BlockFi cryptocurrency lending platform in July. The company is scheduled to appear at a virtual hearing in Texas on Oct. 13 to discuss the imposition of a cessation and cessation order to illegally fund its cryptocurrency lending operations and proprietary trade through the sale of unregistered values. In New Jersey, the cessation order against BlockFi prevented the platform from incorporating new interest account customers into the state.

Celsius users seemed to express their disappointment with regulators coming down to the lending platform, but said the move could be due to them trying to set clearer rules for companies moving into space.

“[Celsius CEO] Time and time again, Alex Mashinsky has cited that they were the ones who came up with the concept of paying profitably for cryptography and, as a result, have undoubtedly poured in the multiple ways in which they can provide their customers, ”he said. say Redditor MaintenanceGold6992. Celsius will withstand the storm. “

Cointelegraph contacted Celsius Network, but received no response at the time of publication.