The securities regulator for Alabama issued a show-cause order on Thursday to Celsius, seeking an explanation from the crypto lending platform for why its offerings don't constitute the sale of securities under state law.
The order precedes actions by Texas and New Jersey, which on Friday moved to launch administration actions against Celsius — in the case of New Jersey, a cease-and-desist was issued. CoinDesk reported on Alabama's show-cause order late Friday.
According to the order, "[t]he investment programs, identified as Celsius Earn Reward, constitute the solicitation of an investment of money; from which an investment return is expected; with such investment return based on the managerial efforts of [Celsius]. The solicited investments, identified as the Celsius "Earn Rewards program", are "investment contrast" and are securities under the Securities Act."
As a result, the Alabama Securities Commission has put it to Celsius to "demonstrate compliance with the registration provisions of the Act or demonstrate why such instruments should not be required to be registered."
During a Friday ask-me-anything session, Celsius CEO Alex Mashinsky said that he hoped to work with regulators in explaining the nature of the crypto lender's business.