DFPI Continues to File Actions Against Crypto Interest Account Providers

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

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

the department is researching various companies across the country that offer customers interest-bearing crypto asset accounts (commonly known as “crypto interest accounts”). This action follows two similar orders issued by the DFPI to Blockfi Lending LLC Y Voyager Digital LLC.

If you are a Celsius customer affected by paused recalls, the Compliance Division wants to hear your story. You may make 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, stock brokers, investment advisers, non-bank installment lenders, payday, mortgage lenders and servicers, escrow companies, franchisors and more.

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