Citing ‘unprecedented risk to consumers’, state of Kentucky blocked crypto lender Celsius to offer its residents paid accounts.
As Bloomberg reported on Friday, September 24, Kentucky’s decision puts it in the company of three other states that took similar action last week.
In this case, the order came from the Kentucky Department of Financial Institutions, which said Celsius was breaking state law by offering its clients unregistered securities. Additionally, the company did not do enough to disclose to consumers what Celsius was doing with their deposits.
The ministry’s emergency ordinance called the accounts “an unregulated market that poses unprecedented risk to consumers.” Celsius can request an emergency hearing to challenge the department’s order or take it to court.
A spokesperson for Celsius told Bloomberg the company is “” disappointed that these shares have been filed “and disputes the allegations. They said the company plans to deal with the issue quickly and customers should not see any changes. in services.
Texas, New Jersey and Alabama have also taken similar action against Celsius. The lender says it has tens of billions of dollars in deposits in interest accounts that can earn double-digit returns.
The Kentucky Order comes at a time when these types of accounts have started to come under more scrutiny from regulators.
Read more: Coinbase Kills Loan Product Amid SEC Ire
Earlier this week, Coinbase announced that it was shutting down its proposed loan product, Coinbase Lend, over fears of a possible Securities and Exchange Commission lawsuit. Coinbase Lend reportedly allowed customers to lend their USDC holdings and receive 4% interest risk-free on the principal.
âOur goal is to create great products for our customers and to advance our mission to increase economic freedom around the world,â Coinbase said in a statement. blog post. “As we continue our work to seek regulatory clarity for the crypto industry as a whole, we have made the difficult decision not to launch the USDC APY program.”