Kentucky Bars Crypto Firm Celsius From Offering Accounts

Citing “unprecedented risk to consumers,” the state of Kentucky has blocked the crypto lender Celsius from offering its residents interest paying accounts. 

As Bloomberg reported Friday (Sept. 24), Kentucky’s move puts it in the company of three other states that took similar measures last week.  

In this case, the order came from the Kentucky Department of Financial Institutions, which says Celsius was in violation of state law by offering customers unregistered securities. In addition, the company did not do enough to disclose to consumers what Celsius did with their deposits.   

The department’s emergency order called the accounts “an unregulated market that represents an unprecedented risk to consumers.” Celsius can request an emergency hearing to challenge the department’s order or take it to court. 

A spokesperson for Celsius told Bloomberg the firm is ““disappointed these actions have been filed” and disputes the allegations. They said the company plans to quickly deal with the matter and customers should see no changes to services.  

Texas, New Jersey and Alabama have also taken similar action against Celsius. The lender says it has tens of billions of dollars in deposits in interest accounts that can pay double-digit returns.  

The order from Kentucky comes at a time when these types of accounts have begun receiving stricter scrutiny from regulators. 

Read more: Coinbase Kills Lend Product Amid SEC Ire 

Earlier this week, Coinbase announced it was shuttering its proposed lending product, Coinbase Lend, out of concerns over a possible lawsuit from the Securities and Exchange Commission. Coinbase Lend would have allowed customers to loan their USDC holdings and receive 4% interest with no risk to principal. 

“Our goal is to create great products for our customers and to advance our mission to increase economic freedom in the world,” Coinbase said in a blog post. “As we continue our work to seek regulatory clarity for the crypto industry as a whole, we’ve made the difficult decision not to launch the USDC APY program.”