Boise, Idaho – The Idaho Department of Finance (the “Department”) is announcing the issuance
of a Notice of Intent (the “Notice”) to Order Celsius Network Inc., Celsius Network Limited, Celsius US
Holding LLC, Celsius Network LLC, and Celsius Lending LLC (collectively referred to as “Celsius”),
to cease and desist from violation of Idaho financial regulation. The Notice informs Celsius of the
Department’s intent to enter an order to cease and desist violation of the Idaho Trust Institutions Act (the
“ITIA”), the Idaho Uniform Securities Act (the “IUSA”), and the Idaho Money Transmitters Act (the
“IMTA”). Celsius is entitled to request a hearing on the allegations of violations prior to issuance of the
intended order.
Celsius markets itself, particularly through its website https://celsius.network/ and mobile phone
application, as providing various digital asset related financial services to customers in the United States,
including purchase, custody, trading, borrowing, and lending services.
Celsius also advertised it participates in income generating digital asset services such as
proprietary trading, staking, lending, and mining. Celsius funds its income generating digital asset
activities through the sale of unregistered securities in the form of cryptocurrency interest-earning
accounts marketed as “Earn Rewards” or “Earn.” As alleged in the Notice, Celsius marketed Earn
Rewards to both retail and institutional passive investors (regardless of sophistication or wealth) and
promised a significant rate of return. As further alleged, the investors’ digital assets were at risk in the
business and pooled with all business assets, including other investor assets, to be used for many aspects
of Celsius’ business. The Department’s Notice alleges that the Earn Rewards accounts are securities
under the IUSA but were not registered as securities with the Securities Bureau of the Department, in
violation of the IUSA.
In conjunction with its range of financial services, Celsius provides exchange and custodial
services for certain digital assets for customers. In offering the exchange services to consumers, the
Department alleges that Celsius has engaged in money transmission without licensure in Idaho in
violation of the IMTA. Celsius has also engaged in trust business, which includes the custody of digital
assets, without proper authorization by the Director of Finance under the ITIA.
Celsius advertised investors could withdraw their assets at any time, subject to certain processing
times. On June 12, 2022, Celsius froze withdrawals, preventing investors from withdrawing any assets
from the accounts they had with Celsius. As of June 17, 2022, Celsius had more than $59,000,000
invested in their Earn Rewards from more than 1,300 Idaho residents and businesses, which represents
the potential for significant financial damage to Idahoans. On July 13, 2022, Celsius commenced
voluntary Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court for the Southern District of
New York.
The Department reminds Idahoans that they can verify licensure or registration of financial
services and providers by accessing its website, at www.finance.idaho.gov/licensee-search/, or by
contacting the Department directly.
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Department of Finance press releases and other information can be found on the Internet at
http://finance.idaho.gov or may be obtained by contacting the Department at (208)-332-8000 or Idaho
toll-free at 1-888-346-3378.
Original source can be found here.
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