The Texas State Securities Board (TSSB) has had the lending platform in its crosshairs for nearly a year.
Several U.S. states including Texas and Alabama are investigating Celsius Network’s decision to halt customer withdrawals.
On June 12, the crypto lending platform published a blog post announcing that it would pause withdrawals, as well as its swap and transfer products, citing “extreme market conditions.” Rumors of the company’s insolvency spread quickly across social media, sparking panic and sell-offs in the markets.
Joe Rotunda, the director of enforcement at the Texas State Securities Board (TSSB) , told CoinDesk that his team learned of the account freeze through social media and met early on Monday morning to begin the investigation.
“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,” Rotunda said to Reuters. “The inability to access their investment may result in significant financial consequences.”
Joe Borg, the director of the Alabama Securities Commission, told CoinDesk he sees the investigation into Celsius’ freezing of customer accounts as a “new wrinkle” in an ongoing investigation.
“We’ve been working with Celsius for a while,” Borg told CoinDesk. “We’ve asked for lots more information, and they’re providing it.
“We’ll continue the investigation as to the company and whether or not we’re going to do the BlockFi model – whether they’re capable of it,” Borg added, referencing BlockFi’s $100 million settlement agreement with the U.S. Securities and Exchange Commission (SEC) and 32 states reached in February.
This is not Celsius’ first brush with Texas’ state securities regulators, who began looking into the platform’s crypto interest accounts – which advertised returns of up to 17% – last September.
Other states – including New Jersey, which filed a cease-and-desist order against Celsius – quickly followed suit.
The investigations of Celsius are mirrored by ongoing state-level investigations of the lending platform’s competitors, including BlockFi and Voyager.