Celsius becomes BlockFi’s “difficult brother” and faces charges from several state regulators
This article comes fromDecrypt, original author: Jeff Benson
Odaily Translator | Nian Yin Si Tang
This article comes from, original author: Jeff BensonBlockFi, a New Jersey-based cryptocurrency lending firm, has been spending the summerwarnFaces scrutiny from multiple state securities regulators over its high-interest crypto savings accounts
. The U.S. Securities and Exchange Commission (SEC) also
warnCoinbase, if it starts a high-yield Lend program, it will be sued.Now, BlockFi's rival Celsius, also based in New Jersey, is facing similar charges from regulators.
filed a cease and desist orderRequire, giving it until the end of October to stop offering its high-interest rate accounts to customers in New Jersey. New Jersey Acting Attorney General Andrew Bruck tweeted: "Our Securities Division has ordered NJ-based Celsius to stop offering interest-bearing accounts. If you sell securities in NJ, you need to comply with NJ securities laws . This includes those operating in the cryptocurrency market.”
Earlier in the day, the Texas Securities Board (TSSB) also
Require
The company is scheduled to attend an administrative hearing on February 14 next year (2022). The TSSB threatened to issue a cease and desist order against the company to prevent it from continuing to serve customers in the state. The order also announced that possible remedies include paying fines and returning funds to Texas customers.
Meanwhile, the Alabama Securities Commissioner said in an order dated Sept. 16 that Celsius violated the state's securities laws with its "Earn Rewards" program. The order states that Celsius has 28 days to respond, explaining why the regulator should not implement the cease and desist order, failing to respond within the time limit means forfeiting the opportunity for a hearing and the regulator will immediately take sanctions.
At the center of the dispute is Celsius' crypto interest account. Customers sign up on the platform and use Celsius to store the cryptocurrencies they own and then loan them out; in return, customers receive interest rates that are much higher than those on traditional bank savings accounts. Celsius advertises returns as high as 17%, but in reality the figure is updated weekly and varies by asset. Currently, stablecoins such as Tether (USDT) and USDC have a yield of 8.88%, while the annualized yield of Ethereum and Bitcoin is about 5%-6%.
Additionally, Texas and New Jersey noted that Celsius’ API Partner Program expanded the reach of such accounts, and in the words of the TSSB, “Celsius API Partners can offer and sell unregistered Celsius Earn Interest to their customers. -Bearing Accounts (Celsius Earning Interest Accounts)."
Regulators in Texas and New Jersey said neither state had approved the deals because Celsius had not registered with those agencies or the SEC to sell securities, which are tradable investment products. Many in the industry, including the SEC and some lawyers who specialize in digital assets, view “yield” products as securities because they function as unsecured bonds, in which the borrower agrees to repay the debt without providing collateral. payment.
The same problem plagued BlockFi as well. On July 20, the company received a cease and desist order from the New Jersey Attorney General's Office. Cease and desist orders from Texas, Vermont and Kentucky followed, along with a Sheine order from Alabama. As a result, BlockFi's market coverage is shrinking. It no longer offers BlockFi interest accounts to Texas residents, and has until Sept. 30 to stop serving New Jersey residents.
