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DFPI continues to bring actions against crypto interest account providers

On August 8, 2022, the DFPI issued an order finding that Celsius Network and its CEO, Alex Mashinsky, made material misrepresentations and omissions in the offer of crypto interest accounts, particularly in understating the risks of depositing digital assets with Celsius. 

The DFPI’s order has determined that Celsius offered accounts that allowed customers to earn interest on digital assets deposited with Celsius without first qualifying those accounts as securities in compliance with California law. On June 25, 2022, Celsius prohibited customer withdrawals from its crypto interest accounts and filed for Chapter 11 bankruptcy reorganization on July 13. 

The Department is investigating multiple companies nationwide that offer customers interest-bearing crypto asset accounts (commonly referred to as “crypto-interest accounts”). This action follows two similar orders issued by the DFPI to Blockfi Lending LLC and Voyager Digital LLC.

If you’re a client of Celsius and impacted by paused withdrawals, the Enforcement Division wants to hear your story. You can file a complaint online or call toll-free at (866) 275-2677.

The DFPI licenses and regulates financial services, including state-chartered banks and credit unions, money transmitters, securities broker-dealers, investment advisers, non-bank installment lenders, payday lenders, mortgage lenders and servicers, escrow companies, franchisors, and more.