The US Federal Trade Commission (FTC) has issued a $4.7 billion fine against crypto lending platform Celsius Network for mishandling user deposits and deceiving customers. The judgment will be suspended to allow for the return of remaining assets to consumers through bankruptcy proceedings. Earlier, the Securities and Exchange Commission (SEC) also filed a lawsuit against Celsius and its former CEO. The Commodity Futures Trading Commission (CFTC) had previously found Celsius and its former CEO guilty of violating multiple laws while operating in the country.

Summary

Celsius Network, a bankrupt crypto lending platform, has been hit with a $4.7 billion fine by the US Federal Trade Commission (FTC) for misusing user deposits and misleading customers. The judgment will be on hold to facilitate the return of assets to consumers through bankruptcy proceedings. Furthermore, the SEC has filed a lawsuit against Celsius and its former CEO. This comes after the CFTC found Celsius and its former CEO guilty of violating US regulations.

Why has Celsius Network faced regulatory action in the US?

Celsius Network, based in New Jersey, offered various cryptocurrency services, including interest-bearing accounts, personal loans backed by bitcoin deposits, and a cryptocurrency exchange. However, the company’s co-founders have been accused by the FTC of misusing over $4 billion in consumer assets while marketing the platform as a secure place for cryptocurrency deposits. The FTC also alleges that Celsius provided $1.2 billion in unsecured loans, falsely claimed to have a $750 million user insurance policy, and lacked proper asset and liability tracking until late 2021. Despite the 2022 cryptocurrency market downturn, Celsius officials allegedly misrepresented the company’s financial state.

FAQ

What is Celsius Network?

Celsius Network is a crypto lending platform that offered services such as interest-bearing accounts, personal loans backed by bitcoin deposits, and a cryptocurrency exchange.

What is the fine imposed by the US Federal Trade Commission?

The US Federal Trade Commission has issued a $4.7 billion fine against Celsius Network for mishandling user deposits and deceiving customers. However, the judgment will be suspended to allow for the return of remaining assets to consumers through bankruptcy proceedings.

What other legal actions have been taken against Celsius Network?

The Securities and Exchange Commission (SEC) has also filed a lawsuit against Celsius Network and its former CEO. Additionally, the Commodity Futures Trading Commission (CFTC) found Celsius and its former CEO guilty of violating multiple US regulations.

What were the allegations made by the US Federal Trade Commission against Celsius Network?

The FTC alleged that the Celsius Network founders misappropriated over $4 billion in consumer assets, made $1.2 billion in unsecured loans, falsely claimed to have a user insurance policy worth $750 million, and lacked proper asset and liability tracking until late 2021. The FTC also stated that Celsius officials misrepresented the company’s financial state during the cryptocurrency bear market in 2022.

Will Celsius Network be permanently barred from offering its services?

As per the FTC judgment, Celsius and its affiliate firms will be permanently prohibited from offering, marketing, or promoting any product or service that involves depositing, exchanging, investing, or withdrawing assets.