• Mon. Mar 4th, 2024

California’s DFPI Asks Celsius To Stop All Operations 

Aug 12, 2022

According to reports, the Californian regulator, the DFPI (Department of Financial Protection and Innovation), has continued with its regulatory measures. The regulator has ordered crypto lending platform, Celsius, to cease all operations in the country.

Before now, the regulator had ordered BlockFi and Voyager to terminate all services in California. This was after reports that they were selling unregistered securities in the country.

DFPI Orders Celsius To Stop Selling Unregistered Securities

Recently, the crypto lender filed for bankruptcy, citing the latest market crisis. According to the regulator’s order, Celsius is to stop all activities in the country.

This includes all upcoming activities and securities trading. The August 8th report claims that while providing the accounts, the Celsius Network and its Chief executive, Alex Mashinsky, made substantial omissions and statements about the risks associated with deposits in crypto assets. 

One of the unmentioned risks, according to the agency, is that third-party custody-related companies could not have access to digital assets. Another threat is that the company may not have sufficient assets to meet the withdrawal requests made by customers in response to an unexpected request. 

Following then, one of the hazards is that the crypto lenders wouldn’t be able to return the crypto lender’s collateral promptly. The platform is also accused of violating California law by not being registered as a securities company to provide digital assets.

Celsius Attorneys Claims Company Has Right To Sell Tokens

Usually, companies that plan to offer securities are required to get permission issued by the DFPI to market securities inside the state’s jurisdiction. The DFPI recently published a stop and desist order that was directed at BlockFi and Voyager in succession. 

On July 6th, Voyager, a cryptocurrency exchange connected to the failing hedge firm 3AC filed for Chapter 11 bankruptcy. On June 13th, Celsius ceased withdrawal and incentives for its customers. 

Since then, it has also stopped liquidations, margin calls, and the issuance of exclusive loans. In its first bankruptcy court, the company’s attorneys claimed that because the consumers transferred the title to the firm in accordance with the ToS, it had the right to sell, pledge, and utilize those tokens.

As a result, users’ funds have been locked since the company stopped withdrawals. Meanwhile, other platforms that have paused withdrawals, such as Zipmex and Voyager, have been able to open withdrawals.

Last week, Zipmex stated that it would allow withdrawals for three altcoins. However, the company revealed this week that it plans to allow withdrawals for BTC and ETH. 

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