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The move of Celsius Network (CEL) at block consumer withdrawals is watched by several US jurisdictionsincluding the states of Texas, New Jersey and Alabama.

The cryptocurrency lending platform said in a blog post that it would temporarily halt withdrawals and its exchange and transfer products on June 12, citing “extreme market circumstances” as the reason for the decision. Celsius said this would put them “in a better position to meet, over time, their withdrawal obligations.”

Massive sales in the market were prompted by rumors that the company was on the verge of bankruptcy, which spread quickly on social networks.

Joseph Borg, the director of the Alabama Securities Commission, confirmed that his agency, along with those in Texas, New Jersey and Kentucky, was investigating the situation.

He said that although the probe is still in its early stages, Celsius has responded to requests from inspectors. Borg went on to say that the United States Securities and Exchange Commission had also been in contact with Celsius.

Acting in the gray zone

In September, Celsius received a cease and desist order from state authorities in Kentucky, New Jersey and Texas. Officials said Celsius’ interest-bearing products must be registered as securities. In February, the SEC and those same state authorities fined BlockFi $100 million for the company’s failure to register its cryptocurrency lending product.

Celsius operates in a manner comparable to that of a bank in that it collects cryptocurrency deposits from retail customers and invests those funds in a market similar to the wholesale cryptocurrency market.

These investments can be made in “decentralized finance”, often known as “Defi”, which refers to websites that use blockchain technology to provide services such as loans and insurance outside of the financial sector. conventional.

Earlier this month, Celsius pumped over 500% within 5 minutes among its liquidity problems. The company also has hired restructuring lawyers to help them with their cash flow issues earlier this week.