Regulators all around the world are trying to protect their citizens from any cryptocurrency-related risk. Especially in terms of an investment scheme. To this effect, some regulators have issued investor alerts and investment warnings. This wave has blown to Kentucky as well.
The Department of Financial Institutions has accused Celsius Network, a New Jersey-based company, of offering unregulated securities-related services. According to the DFI, Celsius has purportedly broken some provisions of the Kentucky Revised Statutes.
Founded by Alex Mashinky, Celsius Network is a website that provides Earn Interest Accounts to investors who stake their coins. The Network promised to give them up to 17% APY. After collecting coins from different investors, the DFI says Celsius would channel them into trading, borrowing and loaning.
In addition, Celsius provided an API, as an infrastructure, for its partners to integrate into the platform. These integrated partners could offer everything Celsius provided for its investors. They can even invest in the EIA for the benefit of their investors.
At this point, the DFI is accusing Celsius that its services were not registered and the company is therefore allegedly unlawful. The DFI noted that Celsius is opening its members to financial risks as it is not protected under the Securities Investor Protection Corporation, Federal Deposit Insurance Corporation, and National Credit Union Administration.
As a regulator, the DFI has issued a Cease and Desist Order. The purpose of this order is to halt all the activities of Celsius, which the DFI found risky to the public, until the matter has been heard and decided in Court.