The Texas Securities Board has reportedly opened an investigation against crypto lending platform Celsius Network for its decision to suspend user withdrawals.
According to a Thursday news item from Reuters, the director of the legal control division of the Texas Securities Board, Joseph Rotunda said the regulator began investigating Celsius on Monday, shortly after the platform announced it was “pausing all withdrawals, conversions and transfers between accounts.” Rotunda reportedly called the investigation a “priority” for the Texas regulator.
“I am very concerned that clients – including many retail investors – may need immediate access to their assets and yet be unable to withdraw them from their accounts,” the director of control allegedly said. “The inability to access your investment can have significant financial consequences.”
The story about a possible investigation against Celsius followed a story in the Wall Street Journal on Thursday stating that Two firms that reportedly backed the crypto lending platform during a funding round in November 2021 were not planning to provide additional funds due to potential risks, citing people with knowledge of the matter. WestCap Group and Canadian pension fund Caisse de dépôt et placement du Québec led a $750 million Series B funding round for Celsius, helping the platform reach a $3.5 billion valuation.
With the cryptocurrency market experiencing significant volatility in June, Celsius reportedly hired lawyers to find different solutions to the current financial challenges facing the company. The CEO, Alex Mashinsky took to Twitter on Wednesday – breaking a three-day silence without giving a signal on social media – to say the Celsius team was working “relentlessly” to address user concerns.
@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
The Texas Securities Board also took action against Celsius in September 2021, initially scheduling a hearing related to allegations that the platform had offered and sold securities within the state that were not registered or permitted, as well as the platform not being had registered as a broker under the Texas Securities Act. The New Jersey Securities Bureau issued a cease and desist order against Celsius for similar alleged violations of the state’s securities laws.
Major cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) have fallen to levels near $20,000 and $1,000, respectively, in the past seven days amid extreme market volatility. Possibly in response to these losses, many cryptocurrency exchanges have announced staff cuts of between 5% and 20%, including Coinbase, Gemini, and Crypto.com.
Cointelegraph has contacted the Celsius Network and the Texas Securities Board, but has not received a response at press time.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.