Celsius Network Reportedly Faces US Federal Investigation

A bankrupt crypto lender, Celsius Network is now facing a federal investigation in the United States due to its alleged operational irregularities, according to a report by Bloomberg on Wednesday.

“The number and extent of investigations of the debtors by governmental entities is significant: Celsius is apparently subject to enforcement proceedings or investigations in at least 40 states, in addition to investigations or inquiries involving the federal government,” counsel of the creditors stated in a Tuesday filing.

The crypto company is facing investigations by multiple state regulators too, Texas State Securities Board highlighted in a statement on September 7.

A Bankrupt Company

Celsius gained popularity by offering interest in cryptocurrency deposits. Once touted as a very promising project, the doom of the platform came when crypto prices slumped earlier this year. The company initially froze client withdrawals in June, citing market volatility, and filed for bankruptcy in New York after a month.

The members of the special committee of the Board of Directors then justified the withdrawal suspension process by saying: “Without a pause, the acceleration of withdrawals would have allowed certain customers, those who were first to act, to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery.”

The customers with deposits have now become unsecured creditors of the crypto lending platform.

Previously, the company received inquiries in the United States from the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and Federal Trade Commission (FTC). Additionally, the federal grand jury of a New York district court subpoenaed Celsius.

Crypto lending projects were under the radar of US federal agencies for a while. Earlier this year, the SEC reportedly initiated a probe against Celsius Network, Voyager Digital and Gemini Trust, however, the agency did not bring any official charges against any of them.