![]() On September 17, Alabama, New Jersey, and Texas each announced a cease-and-desist action against Celsius concerning the company’s Earn Rewards accounts program, which each state has classified as an offering of unregistered securities. As of August 2021, Earn Rewards accounts have generated revenue exceeding $14 billion. Earn Rewards accounts have high interest rates (purportedly “up to 17.78% APY) that are paid on a weekly basis in bitcoin and more than 40 other cryptocurrencies. Additionally, Celsius offers an application programming interface (API) that allows institutional customers of Celsius (API partners) to integrate with the Celsius platform, enabling API partners to offer Earn Rewards accounts to their own retail customers. Through its “Earn Rewards” program, Celsius encourages retail customers to place eligible cryptocurrency into interest-bearing accounts, which Celsius then pools to fund its lending operations and proprietary trading. ![]() These state regulators variously allege that both BlockFi and Celsius have unlawfully offered unregistered securities in the form of high interest-bearing accounts used to fund their lending operations and proprietary trading.Ĭelsius - with the tagline “Unbank Yourself” - advertises its mission as placing “unparalleled economic freedom in the hands of the people.” Celsius users buy, borrow, and trade various cryptocurrencies. ![]() Two months earlier, in July 2021, each of these states filed actions against BlockFi - another New Jersey-based cryptocurrency company that offers credit cards, loans, and interest-generating accounts. In September, Celsius - which provides a blockchain-based cryptocurrency lending and trading platform - became the most recent target of these states’ regulatory enforcement efforts against cryptocurrency products. State regulatory agencies in Alabama, Kentucky, New Jersey, and Texas have increased their efforts to challenge digital asset-related products by issuing cease-and-desist or “show cause” orders against New Jersey-based cryptocurrency company, Celsius Network LLC (Celsius).
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