Bessie Liu

<div id="highlights-block_62ab749cc4df7" class="highlights">
 <ul>
 <li>Celsius froze withdrawals of user assets earlier this week, citing market conditions</li>
 <li>Regulators want to ensure incidents like this do not occur again</li>
 </ul>
 
</div>



Five state regulators have opened investigations into the dealings of Celsius, the cryptocurrency lender now in limbo after suddenly freezing withdrawals due to “extreme” market conditions.&nbsp;



The Texas State Securities Board unveiled its probe into the company’s activities on Thursday.&nbsp;



Four states — Alabama, Kentucky, New Jersey and Washington — are set to join Texas, <a href="https://www.reuters.com/markets/us/exclusive-texas-securities-regulator-is-probing-celsius-account-freeze-official-2022-06-16/" target="_blank" rel="noreferrer noopener">Reuters reported</a>.&nbsp;



Officials had been investigating the matter since Monday morning and the situation has been considered a “priority.”



The crypto industry has been under scrutiny since the collapse of the stablecoin UST, which sent shockwaves across the market after it wiped out <a href="https://cms.blockworks.co/how-cryptoasset-markets-have-changed-since-terra-crash/" target="_blank" rel="noreferrer noopener">billions of dollars</a>. This is the second major blow in as many months, leaving digital assets traders, service providers and investors under mounting duress.&nbsp;



Unlike traditional financial institutions, cryptocurrency lenders are not subject to many risk management and capital disclosures. Their deposits are not government-backed or otherwise insured.&nbsp;



It’s not the first time that Celsius has made its way into the forefront of regulators&#8217; radars. In September last year, Celsius was given a <a href="https://www.nj.gov/oag/newsreleases21/Celsius-Order-9.17.21.pdf" target="_blank" rel="noreferrer noopener">cease and desist letter</a> by state regulators in Alabama, New Jersey and Texas ordering that its products needed to be registered as securities.



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