Crypto lender Celsius Network opted to freeze customer withdrawals and other transactions on Sunday, leaving its nearly two million users unable to access their funds. Now, state security boards in Alabama, Kentucky, New Jersey, Texas and Washington have launched probes into Celsius, Reuters reports. The SEC has also been in contact with the firm. Engadget has reached out to the agency and will update if we hear back.
This isn’t the first time the crypto lender has run into trouble with and federal officials. Multiple states Celsius last year to stop selling what are known as which many investors warn are because they don’t offer the same FDIC protections as banks if the institutions go under. Currently, residents in the states of and can’t purchase assets on Celsius.
Officials at the Texas State Securities Board began discussing Celsius’s surprise freeze on consumer assets first thing on Monday morning, the agency’s executive director Joseph Rotunda told the Reuters. “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. The inability to access their investment may result in significant financial consequences,” he said.
In its memo to users explaining Sunday’s decision, Celsius cited “extreme market conditions” as the primary motivator. The freeze includes transfers, withdrawals and swaps between accounts. “We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations,” the firm wrote.
Users responded via social media over the weekend, often sharing the negative impacts the freeze had on their own finances. One user claimed on Twitter that, because they were unable to access funds to pay or post collateral, the platform had liquidated a loan worth more than $ 27,000. “This is not the reason I unbanked myself,” they wrote.
All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you buy something through one of these links, we may earn an affiliate commission.