Kentucky racks up and issues cease-and-desist order against Celsius Network

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U.S. regulators are determined to kick out unregulated, unlicensed digital currency lending companies, and the latest action is Kentucky. The state’s financial regulator has issued a cease and desist order against Celsius Network, accusing it of selling unregistered securities.

Regulators first set their sights on BlockFi, one of the market leaders in this area. New Jersey, Texas, Alabama, Vermont and Kentucky have all filed for eviction from the company for selling unregistered securities. Then it was Celsius, and now Kentucky is joining New Jersey, Texas, and Alabama in taking similar action.

Kentucky Department of Financial Institutions noted that he had been investigating Celsius since January of this year and concluded that he was offering securities through his “earned interest accounts”. These accounts claim to offer their customers who deposit digital currencies a higher interest rate of 8%, eclipsing the average U.S. bank savings rate which stood at 0.06% at the end of August.

Celsius claims to have attracted $ 24 billion through these accounts from its users. Once the funds were collected, he would lend them to institutions at a much higher rate. It claims to give back 80% of the earned interest to customers.

However, the company does not disclose what it does with the funds; the amount of money he spends on each activity in which he engages; the identity, nature or creditworthiness of borrowers; the terms and terms of their loans; or profits or losses arising from the activities.

The Kentucky regulator’s investigation found that for three years and four months, Celsius had opened 1,607 accounts for 1,571 Kentucky residents. Collectively, they had invested $ 17.6 million, with the company paying them $ 453,353 in interest.

Celsius’s paid accounts constitute an investment contract “because it is an investment of money in a joint venture whose profits come solely from the efforts of others,” the regulator said, citing the test. Howey.

Along with BlockFi and Celsius (which together hold $ 34 billion in investor funds), Coinbase has also found itself at odds with the United States Securities and Exchange Commission (SEC) for teasing a similar loan product.

The crackdown won’t stop anytime soon, as regulators target companies that have exploited the lack of definitive regulations to deliver services that potentially risk investor funds. All of these companies will soon have to answer for flouting financial laws, just as BitMEX and Binance, the core members of the Crypto Crime Cartel, have done in recent months.

Elizabeth Warren, once Democratic Senator from Massachusetts declared, “Crypto is the new shadow bank. It provides many of the same services, but without the consumer protections or financial stability that underpin the traditional system. “

To follow CoinGeek Crypto Crime Cartel series, which plunges into the flow of a-groups of BitMEX To Binance, Bitcoin.com, Block flow, Metamorphose, Coinbase, Ripple and Ethereum– who have co-opted the digital asset revolution and turned the industry into a minefield for naive (and even experienced) market players.

New to Bitcoin? Discover CoinGeek Bitcoin for beginners section, the ultimate resource guide to learning more about Bitcoin – as originally envisioned by Satoshi Nakamoto – and blockchain.


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