The Kentucky banking regulator banned the Celsius Network, a cryptocurrency lending platform, from providing services in the state, accusing it of selling unregistered securities.
The agency issued an order to end illegal actions on the part of the Celsius Network, banning the firm from issuing cryptocurrency loans with the possibility of receiving interest. Over the past three years and four months, the Celsius Network has opened 1,607 accounts for 1,571 Kentucky investors, according to the Department. They deposited about $ 17.6 million in cryptocurrencies to Celsius, while the platform paid them over $ 453,000 over the same period. The regulator states that Celsius investment contracts qualify as securities, however, they are not registered under US law and are not exempt from registration.
“The Department learned that the Celsius Network is offering securities in the form of investment contracts in exchange for asset escrow. These contracts allow investors to receive profit in the form of interest on pledged assets, which are considered securities, ”the regulator said.
The department noted that Celsius investment contracts are not protected or insured by the Securities Investor Protection Corporation (SIPC), the Federal Deposit Insurance Corporation (FDIC) and the US National Credit Union Administration (NCUA). Therefore, Celsius users face significant risks compared to investors who work with broker-dealers, banks and credit cooperatives that interact with SIPC, the Department said. Last week, the Texas Securities Board
presented the credit platform has similar charges.
Last year, the Celsius Network partnered with the Horizen platform to create a system that will increase lending transparency. In March, Celsius partnered with oracle provider Chainlink to increase the decentralization of the quote stream for lending.
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