The U.S. SEC and securities regulators in Alabama, Kentucky, New Jersey, Texas, and Washington are investigating the decision by crypto lender Celsius Network to freeze withdrawals, Reuters reported Thursday.
Texas’ director of enforcement Joseph Rotunda explained that officials representing the five state securities regulators met Monday morning to begin the investigation following Celsius’ withdrawal freeze announcement Sunday night.
Noting that the investigation is a “priority,” Rotunda said:
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 stressed.
Rotunda said he and his team learned about Celsius’ accounts freeze from the company’s tweet and blog post Sunday night.
“Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, swaps, and transfers between accounts,” the company wrote.
Alabama Securities Commission Director Joseph Borg told the publication that the SEC has also been in communication with Celsius, adding that the crypto lender has been responsive to questions from the regulators.
Last year, regulators in a number of states, including Alabama, Kentucky, New Jersey, and Texas hit Celsius with a cease and desist order over the lender’s interest-bearing products, which they said should be registered as a security.
After freezing withdrawals, Celsius reportedly sought help from Akin Gump Strauss Hauer & Feld, a law firm that specializes in financial restructuring. The crypto lender is also reportedly hiring Citigroup as an advisor.
Moreover, Ben Armstrong, aka Bit Boy, announced a class-action lawsuit against Celsius and CEO Alex Mashinsky on Wednesday via Twitter.