Kentucky’s securities regulator has ordered big crypto lender Celsius Network to stop issuing interest-bearing accounts in the state on Thursday, the state now joins three other states that took similar action last week.
The Kentucky Department of Financial Institutions issued the emergency order after finding that Celsius offered customers unregistered securities in violation of state law and failed to adequately disclose what the firm did with their deposits, calling the accounts “an unregulated market that poses an unprecedented risk to consumers.”
Celsius can request an emergency hearing to protest the judgment or appeal it in court, according to the directive.
Kentucky follows Texas, Alabama, and New Jersey in taking action against Celsius, which claims to have tens of billions of dollars in deposits in interest accounts that give double-digit returns at times.
Securities authorities have been closely scrutinizing crypto interest accounts in recent months, with Kentucky and other states taking action against similar accounts marketed by BlockFi Inc.
Coinbase Global Inc., the largest cryptocurrency exchange in the United States, had planned to provide its own version of the accounts, but abandoned those plans last week when the Securities and Exchange Commission threatened to sue.
Interest accounts, which, unlike bank savings accounts, do not have federal deposit protection, have been argued by securities authorities to be registered as securities and to give more risk disclosures to investors.
