The regulator is alleging Celsius’ interest-bearing accounts violate state securities law.
The Celsius Network has drawn the ire of Kentucky’s securities regulator in the latest legal move by a U.S. state against the crypto startup and its lending products.
In a filing Thursday, the state’s Division of Securities, part of the Kentucky Department of Financial Institutions, entered an emergency order to cease and desist against the startup over its “Earn Interest Accounts.”
The regulator takes issue with the startup’s language regarding interest earned on certain crypto accounts that Celsius dubs “rewards” or a “financing fee.” The regulator is alleging Celsius’ interest-bearing accounts violate state securities law and fail to disclose to customers what occurs with their deposits, nor are the customers protected under state securities protections.
Celsius may request an emergency hearing to challenge the decision or may appeal via the courts.
Kentucky’s filing is yet another blow to the embattled startup that has already drawn the regulatory ire of Texas, Alabama and New Jersey.
Last week, Celsius CEO Alex Mashinsky dismissed his crypto lending firm’s standoff with state regulators, telling a live-streamed ask-me-anything audience that he welcomes the chance to “educate” the regulators on how his business functions.