Bitcoin Lender Celsius Denies Receiving Cease and Desist From New York AG
![Bitcoin Lender Celsius Denies Receiving Cease and Desist From New York AG](https://top-crypto.io/wp-content/uploads/2021/10/Bitcoin-Lender-Celsius-Denies-Receiving-Cease-and-Desist-From-New.jpg)
In brief
Celsius has been targeted by several state securities regulators.
Now the New York Attorney General is asking questions, too.
Celsius has denied receiving a cease-and-desist letter from New York State Attorney General Letitia James, a day after James directed two unnamed crypto lenders to stop operating in the Empire State within 10 days and requested three more to provide information by November 1.
“Celsius has received a request for information (and not a cease and desist) from NY authorities,” it wrote via its Medium blog today.
In a press release yesterday, the New York Attorney General’s Office took aim at crypto companies that have not registered securities offerings under New York’s Martin Act. The press release was accompanied by two cease-and-desist letters with identifying information about the companies redacted. However, the NYAG had named the files “Nexo Letter” and “Celsius Letter,” strongly suggesting that these were the two crypto lenders being asked to shut down.
Celsius competitor Nexo yesterday confirmed receiving the order but called it a “mix up.”
“Nexo is not offering its Earn Product and Exchange in New York, so it makes little sense to be receiving a cease and desist order for something we are not offering in New York anyway,” a spokesperson said. It vowed to “engage with the NY AG and seek clarity.”
Celsius is fresh off a $400 million funding round after being valued at more than $3 billion. This despite cease and desists or show-cause orders from state securities regulators in Alabama, Kentucky, New Jersey, and Texas—all of whom have also targeted crypto lender BlockFi.
The startup, which uses the slogan “Unbank Yourself,” allows people to earn interest on the cryptocurrency they hold. And not just a small amount; it advertises up to 17% annual return, though the rates vary depending on the asset. In addition to mainstays such as Bitcoin and Ethereum, users can also deposit the native Celsius tokens, stablecoins, and a slew of other crypto assets. Celsius then lends those coins out and gives depositors a cut of the action.
Yield products such as these are classically classified as securities both at the federal and state level, as James alluded to in her statement, though that doesn’t mean the companies will go down without a fight. Coinbase, which was planning its own Lend product, suggested it would be willing to go to court if necessary after the Securities and Exchange Commission purportedly threatened a lawsuit. Coinbase ultimately dropped the product.
According to the NYAG letter requesting information, the office wants to know company information, including legal names, subsidiaries, and headquarters. It also wants product descriptions and explanations of how the digital assets are custodied, pooled or loaned out. Celsius said, “We are now working on providing regulators in New York with information about our business and offering.”
It added: “We expect additional US states to reach out to Celsius requesting information.”