California Financial Regulator Slaps Crypto Lender Celsius With ‘Desist and Refrain’ Order Amid Bankruptcy

California’s financial services regulator is issuing a desist and refrain order to embattled crypto lender Celsius Network for violating state laws.

The Department of Financial Protection and Innovation of California (DFPI) is ordering Celsius and its CEO, Alexander Mashinsky, to stop selling and marketing securities in the Golden State over claims that the company violated the local Corporation Code.

“Under section 25532 of the Corporations Code, Celsius Network Inc., Celsius Network Limited, Celsius US Holding LLC, Celsius Network LLC, and any of their subsidiaries, and Alexander Mashinsky, are ordered to desist and refrain from the further offers and sale of securities in California, including but not limited to the Earn Rewards accounts, unless such sale has been qualified under Corporations Code section 25111, 25112, or 25113, or unless such security or transaction is exempted or not subject to qualification.”

The regulator alleges that the Earn Rewards accounts offered by Celsius are unauthorized securities. It also claims that the New Jersey-based corporation and its CEO, Alexander Mashinsky, made materially misleading statements on the risks of investing in these accounts.

A committee representing the unsecured creditors of Celsius is also investigating Mashinsky for alleged wrongdoing.

The desist and refrain order comes on the heels of Celsius filing for bankruptcy On July 13, 2022, the day after the company paused rewards and withdrawals for its users citing turmoil in the crypto market.

A spokesperson from blockchain-based payments company Ripple has hinted that the firm is looking at the feasibility of buying Celsius’s assets.

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