US state regulators are increasing scrutiny into Celsius and Voyager: Bloomberg

Quick Take

  • Texas and Alabama regulators are reportedly expanding investigations into Celsius and Voyager.
  • The authorities are looking at what went wrong and why.

Securities regulators in Texas and Alabama are expanding their investigations into troubled crypto lending firms Celsius and Voyager, according to a Bloomberg report on Friday.

The two states are said to be examining whether Voyager and Celsius fully disclosed information on their loans and the creditworthiness of borrowers.

Joe Rotunda, director of enforcement at the Texas State Securities Board, told Bloomberg that the regulator is finding a lot of firms may not have adequately disclosed what they were doing with investors' funds, including the amount of risk they were taking and the type of transactions they were conducting.

Amanda Senn, chief deputy director at the Alabama Securities Commission, told the outlet that the regulator was investigating these companies and "trying to figure out what happened and why."

Senn added that the investigations were still in the initial stages, "but we have a responsibility on behalf of our investors in our states."

Last September, both the Texas and Alabama regulators claimed that Celsius's interest-bearing crypto deposit offerings were unregistered securities.

Celsius and Voyager are both struggling financially, as The Block has previously reported:

Celsius halted withdrawals on June 12 and since then clients' funds have remained stuck. The firm has hired legal and financial advisers to explore possible restructuring options.

Voyager filed for Chapter 11 bankruptcy protection earlier this week. Funds of Voyager's clients also remain stuck, since the firm halted withdrawals last week after its counterparty and troubled hedge fund Three Arrows Capital failed to repay a $650 million loan.

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