The California Department of Financial Protection and Innovation (DFPI) continues to take action against crypto interest account providers for failing to comply with local law. After ordering BlockFi and Voyager to cease their offerings in the state, the DFPI issued a cease and desist order to crypto lending firm Celsius..
The order simply means that cryptocurrency lending platformwhich is in bankruptcy proceedings, you must stop all your subsequent sales and trading of securities in the state of California.
The order had been published on August 8 and alleges that Celsius Network and its CEO, Alex Mashinsky, committed material misrepresentations and omissions in offering crypto interest accounts, particularly by underestimating the risks of depositing digital assets.
According to the Department, hazards not listed include risk that third-party escrow services may lose access to digital assets; the risk of that lenders are unable to repay Celsius collateral on time; the risk of that in the event of a sudden request for withdrawals Celsius does not hold adequate assets to meet the withdrawal demands of clients.
The platform is also being accused of failing to qualify deposited digital assets as securities in compliance with California law, a Section 25110 of the Corporations Code. To sell these types of securities in the state, a company must obtain a permit from the DFPI.
In July 2022, the DFPI issued two cease and desist orders to BlockFi and Voyager, respectively.. Voyager, a cryptocurrency exchange affiliated with failed hedge fund Three Arrows Capital (3AC), filed for Chapter 11 bankruptcy on July 6.
Celsius suspended rewards and withdrawals for all users on June 13 and has since suspended margin calls, liquidations, and the issuance of new loans.. During the first bankruptcy hearing, the platform’s lawyers claimed that Celsius is free to “use, sell, pawn, and remortgage those coins,” as users transferred ownership of their coins to the company on their terms. of service (ToS).
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