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Regulators in Five States Target Celsius Over Withdrawal Freeze: Report

16 Jun, 20223 min readRegulation
Regulators in Five States Target Celsius Over Withdrawal Freeze: Report

Securities regulators in five states have set their sights on crypto lending company Celsius Network over its decision to suspend customer withdrawals this week, according to a report by Reuters.

Joseph Rotunda, Texas State Securities Board director of enforcement, told Reuters that officials in Texas, Alabama, Kentucky, New Jersey, and Washington are making it a “priority” to investigate the crypto lender.

"I am very concerned that clients—including many retail investors—may need to immediately access their assets yet are unable to withdraw from their accounts," Rotunda told Reuters. "The inability to access their investment may result in significant financial consequences."

Rotunda said state regulators met on Monday to begin their investigations into Celsius, which froze client accounts on Sunday in an apparent liquidity crisis.

In a blog post, Celsius told its over 1.7 million customers that it would pause withdrawals, swaps, and transfers between accounts, citing "extreme market conditions."

[email protected] is pausing all withdrawals, Swap, and transfers between accounts. Acting in the interest of our community is our top priority. Our operations continue and we will continue to share information with the community. More here: — Celsius (@CelsiusNetwork) June 13, 2022

"We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations," the post read. Following the announcement, Celsius' native token CEL plunged 70% in one hour from $0.49 earlier on Sunday to $0.15, according to CoinMarketCap.

At the moment, the CEL token is the 148th largest cryptocurrency by market capitalization, currently trading at $0.53, up 1% in the last 24hrs.

On Wednesday, Celsius CEO Alex Mashinsky broke a three-day silence and took to Twitter to say that the company is focused on its customers’ concerns and is thankful to have heard from so many. "To see you come together is a clear sign our community is the strongest in the world," Mashinsky tweeted. "This is a difficult moment; your patience and support mean the world to us."

@CelsiusNetwork team is working non-stop. We’re focused on your concerns and thankful to have heard from so many. To see you come together is a clear sign our community is the strongest in the world. This is a difficult moment; your patience and support mean the world to us.— Alex Mashinsky (@Mashinsky) June 15, 2022

While Mashinsky put on an optimistic tone on social media, Celsius began hiring restructuring attorneys from the law firm Akin Gump Strauss Hauer & Feld LLP for financial guidance, according to the Wall Street Journal.

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