California's Consumer Protection Agency orders Celsius to desist

The California consumer protection agency DFPI continues to crack down on crypto savings platforms. After BlockFi and Voyager were ordered to cease operations in California, Celsius is now being targeted by the agency.

In the official cease and desist order, the Consumer Protection Agency argues that the Celsius Network and its CEO, Alex Mashinsky, engage in the unlawful sale of disallowed securities in the form of crypto savings accounts . Among other things, the DFPI complains that the savings platform has not sufficiently communicated the associated risks to consumers.

For example, Celsius would make money from lending crypto funds invested by users to third parties, but this comes with great risks, as these third parties could lose funds or fail to repay loans on time, which in turn could lead to Celsius' liquidity shortages.

To the chagrin of consumers, these objections have now come true, because in the course of the crisis on the crypto market, the savings platform got into trouble and had to file for bankruptcy. A payout stop was previously imposed, which means that crypto investors can no longer access their invested funds.

In July 2022, the Consumer Protection Agency had already issued two similar cease and desist letters to BlockFi and Voyager . Voyager Digital, which is linked to failed crypto hedge fund Three Arrows Capital (3AC), had to file for bankruptcy on July 6th .

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