SEC, state regulators are investigating crypto lender Celsius over account freezes

• SEC & many state regulators are reportedly investigating Celsius Network’s move to freeze withdrawals.
• Securities regulators in the United States are looking into Celsius’ withdrawal freeze.
• “The inability to access their investment may result in significant financial consequences,” Rotunda said.

The SEC and securities regulators in Alabama, Kentucky, New Jersey, Texas, and Washington are looking into Celsius Network’s move to freeze withdrawals.

According to Texas’ director of enforcement Joseph Rotunda, representatives from the five-state securities regulators gathered Monday morning to begin the inquiry following Celsius’ withdrawal freeze notification Sunday night.

Noting that the investigation is a “priority,” Rotunda said:

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“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.”

“The inability to access their investment may result in significant financial consequences,” he stressed.

Rotunda said he and his team learned about Celsius’ accounts freeze from the company’s tweet and blog post-Sunday night.

“Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, swaps, and transfers between accounts,” the company wrote.

Alabama Securities Commission Director Joseph Borg told the publication that the SEC has also been in contact with Celsius and that the cryptocurrency lender has been attentive to the regulators’ queries.

Last year, authorities in many states, including Alabama, Kentucky, New Jersey, and Texas, issued a cease and desist order to Celsius about the lender’s interest-bearing products, which they claimed should be registered as securities.

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Celsius apparently requested assistance from Akin Gump Strauss Hauer & Feld, a law firm that specializes in financial restructuring, after freezing withdrawals. Citigroup is also said to be working with the crypto lender as an advisor.

Furthermore, on Wednesday, Ben Armstrong, aka Bit Boy, announced a class-action lawsuit against Celsius and CEO Alex Mashinsky through Twitter.