The ripple effect of February’s $100 million BlockFi settlement with the SEC continues, with Celsius Network ending its Earn product for new unaccredited investors in the US
In an email to its users on the 16th of April, Celsius Network has advised that effective immediately it will no longer offer an ‘Earn’ product for unaccredited investors in the US.
Under Regulation D the SEC uses the term ‘accredited investor’ in the United States to describe investors who are financially knowledgeable and have a lower need for the protection offered by regulatory disclosure filings. Accredited investors are typically high-net-worth individuals (HNWIs), banks, insurance firms, brokers, and trusts.
The average retail crypto holder is not an accredited investor, so the move by Celsius effectively closes the door on them accessing Celsius’s high-interest rates for crypto deposits. The company says it has been in constant communication with US regulators about its Earn product prior to the announcement.
Why is this happening?
The move follows the now infamous BlockFi settlement with the SEC in February. After being accused of breaking securities law with its interest-based offerings, US-based BlockFi agreed
to pay $50 million to the SEC and $50 million to 32 US states as part of a $100 million settlement deal.
Given it was headquartered in the US, BlockFi was an easy target for regulators, but in reality, all the major crypto finance platforms are/were offering similar interest-bearing accounts to BlockFi – and it appears they’re all moving to avoid similar legal action by shutting down interest-bearing accounts for new US customers. Nexo was one of the first to move, also ending its Earn product for US customers back in February.
Celsius Earn Changes
Importantly, existing Earn account balances of US users will continue to receive their interest payments as all coins transferred to Celsius prior to April 15, 2022, will continue to collect rewards. As long as the coins are in their Earn accounts, users will continue to earn incentives. Celsius says these account modifications will have no effect on users outside the US.
Celsius will provide a new ‘Custody’ solution for US customers after April 15 from where users can securely navigate across all of Celsius’ offerings, including store, access, borrow, spend, earn, and grow.
Non-accredited investors will have new transfers kept in their new Custody accounts, which will not accrue rewards.
All coins placed as collateral against a loan that was opened prior to April 15, 2022, will be restored to US customers’ Earn accounts when the loan is repaid. As long as the coins are in their Earn accounts, users will continue to earn incentives.
Verified accredited investors in the US will be able to deposit additional coins to their Earn accounts and continue to earn incentives.
Check the latest deposit interest rates for all providers here.