WASHINGTON : Liquidity troubles at crypto lending platform Celsius Network, which have left its 1.7 million customers unable to redeem their assets, will increase U.S. regulatory pressure on the sector, which was already on the defensive amid other crises this year.
Securities regulators in Alabama, Kentucky, New Jersey, Texas and Washington have opened an investigation into the Celsius decision, the director of enforcement for the Texas State Securities Board told Reuters on Thursday. Recent turmoil in the cryptocurrency market underscores the"urgent need" for regulatory frameworks that reduce digital asset risks, a U.S. Treasury official said on Thursday.
As a result, its customers had little visibility over how it was investing their assets, and it's unclear if they will get them back. The SEC meanwhile last year blocked a Coinbase Global Inc plan to launch a lending product and sued lending platform BitConnect for fraud. Registering crypto lending products would not eliminate all risks to investors, but would increase transparency around such products and ensure some risk management controls, said experts.
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