The Celsius digital asset lending protocol is in the crosshairs of the authorities. The Texas State Securities Council in the US has opened an investigation into Celsius’ decision to suspend withdrawals to its clients last week.
Texas regulator is investigating Celsius collapse
On June 13, Celsius halted user withdrawals. The team cited “unfavorable market conditions” as a justification for the action, but without giving further details.
To Reuters, Joseph Rotunda, director of enforcement for the council, said this investigation is a priority:
“The team began investigating the account freeze on Monday morning,” Rotunda said in an email.
Rotunda said he was concerned that customers would not be able to make their withdrawals. Therefore, the board will investigate the case:
“I am very concerned that customers – including many retail investors – may need to immediately access their assets but not be able to withdraw from their accounts. The inability to access your investments can result in significant financial consequences,” he said.
With the proposal to offer attractive yields to users, the Celsius protocol has grown to become one of the largest in this market. In exchange for depositing digital assets, investors received yields that could reach up to 18.63% per year.
Although the yield was nothing too exaggerated, the market began to cast suspicions about the sustainability of the Celsius model.
In general, loan protocols tend to do well in times of high market. But now that the moment is of falling prices, the problems tend to resurface.
So, with the recent crypto market slump this week, Celsius ended up needing to stop user withdrawals.
After the lockdown, Celsius began a complete restructuring plan for its activities. According to the Wall Street Journal, the protocol hired specialist law firm Akin Gump Strauss Hauer & Feld LLP. In addition, Citibank would also be helping Celsius in the task of revamping activities.edit card