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Celsius is the next name to be ordered by the California Department of Financial Protection and Innovation to suspend operations, after BlockFi and Voyager.
DFPI – California’s Bureau of Financial Innovation and Protection is consistently showing “strong” sanctions against crypto lending service providers that break the law. BlockFi and Voyager are two names that have been ordered to stop providing services in the state since last month.
Most recently, DFPI has issued an order to cancel and suspend operations for crypto lender Celsius. While Celsius is undergoing bankruptcy proceedings, the platform will suspend all operations and services related to securities trading, exchange and marketing in the state of California.
Accordingly, the order issued on 8/8, declaring Celsius Network and CEO Alex Mashinsky mispromoted and seriously omitted when offering crypto interest accounts, especially in terms of risk mitigation for digital asset deposits on the platform. The DFPI said that Celsius has completely failed to let customers know of any risks they took in the early stages, such as third-party custody that could cause loss of access to digital assets, or case the foundation is unable to return the collateral on time. Users may also encounter a request for a quick withdrawal, without notice, resulting in Celsius may not have enough assets to satisfy, even the customer does not get the money out.
Celsius has been accused of failing to meet or guarantee investments in digital assets deposited in the form of securities under California law, according to Section 25110 of the Corporations Code. While, to be able to offer these types of securities in the state, crypto companies must obtain a license from the DFPI.
Last month, DFPI issued similar cancellations and suspensions for BlockFi and Voyager Digital. Voyager, a cryptocurrency exchange affiliated with the Three Arrows Capital (3AC) fund, filed for Chapter 11 bankruptcy on July 6.
Celsius did not allow users to withdraw funds and suspended its rewards program from June 13, including margin trading, liquidation and new loan issuance since then. At the first court hearing, Celsius attorneys stated that the company is free to “use, sell, pledge and re-stock such cryptocurrencies” by users who have transferred ownership. their digital assets to the company on a terms of service (ToS).
Last week, good news for Celsius when Ripple Labs – a global financial trading company based in San Francisco – is considering buying Celsius assets in order to expand the size of the company. According to the bankruptcy filing, Celsius’ assets include: digital assets held in custodial accounts, loans, Bitcoin, its CEL tokens, bank cash, and other cryptocurrencies. Besides, Celsius also recorded a loss of $1.2 billion on its balance sheet.
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