STATEMENT OF CHARGES
DEPARTMENT OF FINANCIAL INSTITUTIONS
Securities Division
PO Box 9033
Olympia, WA 98507-
9033
360-902-8760
1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
STATE OF WASHINGTON
DEPARTMENT OF FINANCIAL INSTITUTIONS
SECURITIES DIVISION
IN THE MATTER OF DETERMINING
Whether there has been a violation of the
Securities Act of Washington by:
Celsius Network Inc.
;
Celsius Network Limited
;
Celsius US Holding LLC
,
Celsius Network LLC
;
Celsius Lending LLC
;
Respondents.
Order No. S-21-3212-21-SC01
STATEMENT OF CHARGES AND NOTICE OF
INTENT TO ENTER ORDER TO CEASE AND
DESIST, TO IMPOSE
A FINE, AND TO CHARGE
COSTS
THE STATE OF WASHINGTON TO: Celsius Network Inc.,
Celsius Network Limited,
Celsius US Holding LLC,
Celsius Network LLC, and
Celsius Lending LLC
STATEMENT OF CHARGES
Please take notice that the Securities Administrator of the state of Washington has reason to believe
that Respondents Celsius Network Inc., Celsius Network Limited, Celsius US Holding LLC, Celsius
Network LLC, and Celsius Lending LLC have violated the Securities Act of Washington. The Securities
Administrator believes these violations justify the entry of an order against Respondents Celsius Network
Inc., Celsius Network Limited, Celsius US Holding LLC, Celsius Network LLC, and Celsius Lending LLC
to cease and desist from such violations, to impose a fine, and to charge costs pursuant to RCW 21.20.390
and RCW 21.20.395. The Securities Administrator finds as follows:
TENTATIVE FINDINGS OF FACT
Respondents
1. Celsius Network Inc. is a Delaware corporation formed on February 8, 2018 with its principal
place of business in Hoboken, New Jersey. Celsius Network Inc. owns over 82% of Celsius Network
STATEMENT OF CHARGES
DEPARTMENT OF FINANCIAL INSTITUTIONS
Securities Division
PO Box 9033
Olympia, WA 98507-
9033
360-902-8760
2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Limited. Celsius Network Inc. is not registered to do business in Washington and is not registered with the
Securities Division in any capacity.
2. Celsius Network Limited is an England and Wales private limited company formed on
February 9, 2018 with its principal place of business in London, England. Celsius Network Limited wholly
owns Celsius US Holding LLC. Celsius Network Limited is not registered to do business in Washington
and is not registered with the Securities Division in any capacity.
3. Celsius US Holding LLC is a Delaware limited liability company formed on October 5, 2020
with its principal place of business in Hoboken, New Jersey. Celsius US Holding LLC wholly owns Celsius
Network LLC and Celsius Lending LLC. Celsius US Holding LLC is not registered to do business in
Washington and is not registered with the Securities Division in any capacity.
4. Celsius Network LLC is a Delaware limited liability company formed on June 14, 2021 with
its principal place of business in Hoboken, New Jersey. Celsius Network LLC is not registered to do
business in Washington and is not registered with the Securities Division in any capacity.
5. Celsius Lending LLC is a Delaware limited liability company formed on October 5, 2020 with
its principal place of business in Hoboken, New Jersey. Celsius Lending LLC is registered as a foreign
limited liability company in Washington but is not registered with the Securities Division in any capacity.
6. The above-named entities will be collectively referred to in this Statement of Charges as
“Respondents” or “Celsius.” Celsius provides various virtual currency-related financial services to retail
and institutional customers in the United States, including trading, borrowing, and lending services. Celsius
is also engaged in other income-generating virtual currency activities such as proprietary trading, staking,
and mining.
//
//
STATEMENT OF CHARGES
DEPARTMENT OF FINANCIAL INSTITUTIONS
Securities Division
PO Box 9033
Olympia, WA 98507-
9033
360-902-8760
3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Nature of the Conduct
Overview
7. From approximately June 2018 until February 2019, and again from approximately January
2020 to July 2021, Celsius offered their Earned Interest Program (“EIP”) to Washington customers. The
EIP enabled customers to earn interest, called “rewards,” on virtual currencies that the customer deposited
with Celsius. Celsius offered the EIP through two methods: (1) Earned Interest Accounts (“EIAs”) that
customers can open directly with Celsius, or (2) the API Partners Program, where partner companies can
utilize Celsius’ platform to offer their customers the opportunity to participate in the EIP. To earn income
to pay interest to EIP customers, Celsius engaged in numerous activities, including lending the customers’
virtual currencies to retail and institutional borrowers. To date, Celsius has paid interest to at least 1,400
Washington residents through the EIP. As of August 29, 2021, Washington customers have a collective
account value of over $137,000,000.
8. Celsius promoted the EIP to Washington residents primarily online. Celsius maintained a
website at https://celsius.network, through which it provided information about its EIP, a list of supported
virtual currencies and their corresponding interest rates, and an updated total of Celsius users and
“community assets” on deposit with Celsius. Celsius also promoted the EIP on social media and in numerous
“Ask Mashinsky Anything” (“AMA”) YouTube videos featuring its CEO, Alex Mashinsky.
9. Celsius in particular marketed itself as a virtual currency financial solution for its
“community” of retail customers called “Celsians.” Celsius represented that it provided “fair and transparent
services that have been abandoned by banks” to its retail customers. In an AMA and other online content,
Celsius stated that it returns up to 80% of its earnings to customers.
10. Celsius has advertised interest rates of up to 17% APY on particular virtual currencies, much
higher than the rates currently being offered for short-term, investment grade, fixed income securities or for
STATEMENT OF CHARGES
DEPARTMENT OF FINANCIAL INSTITUTIONS
Securities Division
PO Box 9033
Olympia, WA 98507-
9033
360-902-8760
4
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
bank savings accounts. Celsius does not insure EIAs against losses incurred by customers, nor are EIAs
insured by the FDIC, SIPC, or NCUA.
Earned Interest Accounts
11. Celsius allows anyone 18 years and older and residing in a permissible jurisdiction to open
EIAs on its website and mobile app. Celsius collects customer information, including photo identification,
to verify the customer’s identity for “Know Your Customer” (KYC) and anti-money laundering (AML)
purposes.
12. Celsius also requires customers to accept its Terms of Service upon signing up for an EIA,
including the transfer of “all right and title” in the virtual currency from the customer to Celsius. Beginning
around August 2021, Celsius began informing customers, through the Terms of Service, that their deposit
of virtual currencies into the EIA constituted a loan from the customer to Celsius, and that the interest that
Celsius paid to the customer was a finance fee.
13. When an EIP customer funds their EIA with a supported virtual currency, Celsius then
transfers the virtual currency into its own wallet, where it is pooled with virtual currency from other EIP
customers and other Celsius assets.
1
Celsius then deploys the EIP virtual currency towards various income-
generating activities (see Paragraph 19).
14. Celsius credits the customer’s EIA with interest on a weekly basis. The customer can choose
between receiving interest in like-kind virtual currency or, where available, in CEL Tokens, Celsius’ own
virtual currency.
2
Celsius pays interest to the customer until the customer withdraws their virtual currencies
1
However, beginning some time in 2020 until approximately July 2021, Celsius transferred Washington customers’ EIP virtual
currencies to a third-party custodian for holding. Celsius maintains that the virtual currencies held by the custodian were not
deployed in income-generating activities, though these Washington customers still earned interest on their virtual currencies like
any other EIP customer.
2
According to Celsius, CEL Tokens are only available to accredited investors in the United States. Celsius maintains a trading
platform where customers can buy and sell CEL Tokens, though Celsius states that this service is not available to Washington
residents.
STATEMENT OF CHARGES
DEPARTMENT OF FINANCIAL INSTITUTIONS
Securities Division
PO Box 9033
Olympia, WA 98507-
9033
360-902-8760
5
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
or uses their virtual currencies as collateral against loans that the customer takes out from Celsius.
3
Celsius
allows EIA customers to withdraw their virtual currencies at any time, subject to a maximum three-day
processing period.
15. Celsius revisits the interest rate also on a weekly basis. According to Celsius, it determines
interest rates based largely on “market demand” for a particular virtual currency. For certain virtual
currencies such as Bitcoin and Ether, Celsius further sets the interest rate using a tiered structure.
API Partner Program
16. Celsius offers other companies the opportunity to provide the EIP to their own customers by
becoming an API Partner. Celsius conducts due diligence on a potential API Partner prior to the
establishment of the relationship. An API Partner can provide Celsius’ EIP to its own customers through
two different types of accounts: Segmented and Omnibus. Both types of API accounts are subject to the
same restrictions and conditions as those on Celsius’ own platform.
17. With Segmented Accounts, the API Partner’s customers establish a direct relationship with
Celsius. Celsius onboards those customers in the same way that it brings on its own customers, including
verifying customer identities for KYC/AML purposes. The API Partner’s customers must also open their
own Celsius EIA and accept Celsius’ Terms of Service, though the customer accesses their account through
the Partner’s platform. Celsius pays interest directly into the customer’s account.
18. Omnibus Accounts, on the other hand, require the API Partner to establish its own EIP account
with Celsius. Celsius pays interest into that account, and the API Partner then distributes the interest to its
own customers. Celsius does not maintain a relationship with the API Partner’s customers and does not
know their identities. However, Celsius conducts additional due diligence into the Partners’ business
3
The retail borrowing program is not open to Washington residents, according to Celsius.
STATEMENT OF CHARGES
DEPARTMENT OF FINANCIAL INSTITUTIONS
Securities Division
PO Box 9033
Olympia, WA 98507-
9033
360-902-8760
6
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
practices and reviews, among other things, the Partners’ policies and procedures related to KYC/AML rules.
Celsius establishes a direct contractual relationship with the API Partner and requires the API Partner to
offer the same interest to its customers that Celsius offers to its own customers.
Deployment and Income-Generating Activities
19. Celsius uses the virtual currencies deposited by EIP customers in several income-generating
activities. These activities include lending the virtual currencies to institutional and retail borrowers, posting
it as collateral for its own stablecoin borrowing, and using the virtual currencies for market making, staking,
mining, yield farming, and proprietary trading. Celsius also invests the EIP virtual currencies, at times
through third party asset managers that are vetted by Celsius. Celsius regularly researches the market to
identify other possible income-generating activities and has multiples teams tasked to review the potential
of these activities.
20. With regard to institutional and retail lending, Celsius manages most, if not all, aspects of the
loan and lending process. Among other things, Celsius obtains borrower information, assesses their credit
risks, tailors terms of the loans, including any required collateral, in accordance with the borrower’s risk
profile, monitors counterparty risk after the loan has been funded, liquidates posted collateral where needed,
and services the loans.
21. Celsius uses the income it receives from these activities to pay interest to EIP customers and
for operating expenses, among other uses.
22. Celsius requires EIP customers to agree to the commingling and deployment of their virtual
currencies in this manner in Celsius’ Terms of Service. Celsius customers agree to relinquish all rights and
title to the virtual currency and to allow Celsius to “pledge, re-pledge, hypothecate, rehypothecate, sell,
lend, or otherwise transfer or use any amount of [the virtual currency], separately or together with other
STATEMENT OF CHARGES
DEPARTMENT OF FINANCIAL INSTITUTIONS
Securities Division
PO Box 9033
Olympia, WA 98507-
9033
360-902-8760
7
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
property,….and to use or invest such [virtual currency].” EIP customers have no control over how their
virtual currencies are deployed by Celsius.
Material Misleading Statements and Omissions in Offer and Sale of EIPs
23. In offering the EIPs to Washington residents, Celsius failed to fully disclose material aspects
of its business and the EIP including, but not limited to, the types of trading and investment activities that it
engages in using EIP virtual currencies, the identities and creditworthiness of those who borrow EIP virtual
currencies, the amount of virtual currencies used in each income-generating activity, and Celsius financial
statements or other information reflecting its financial state.
24. In addition, Celsius’ statements that it provides 80% of its revenue to its customers is
misleading, as EIP customers are only entitled to earning interest at set rates determined by Celsius.
Need For Further Investigation
25. The Securities Division is continuing to investigate the matter alleged herein to determine the
full extent of the violations of the Securities Act that have occurred in this matter. The Securities Division
may amend this Statement of Charges in the future to reflect any additional factual allegations and/or
violations as a result of the continuing investigation.
Registration Status
26. Celsius Network Inc. is not currently registered to sell the Earned Interest Program in the state
of Washington and has not previously been so registered, nor has it filed a claim of exemption from
registration.
27. Celsius Network Inc. is not currently registered as a broker-dealer in the state of Washington
and has not previously been so registered.
28. Celsius Network Limited is not currently registered to sell the Earned Interest Program in the
state of Washington and has not previously been so registered, nor has it filed a claim of exemption from
STATEMENT OF CHARGES
DEPARTMENT OF FINANCIAL INSTITUTIONS
Securities Division
PO Box 9033
Olympia, WA 98507-
9033
360-902-8760
8
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
registration.
29. Celsius Network Limited is not currently registered as a broker-dealer in the state of
Washington and has not previously been so registered.
30. Celsius US Holding LLC is not currently registered to sell the Earned Interest Program in the
state of Washington and has not previously been so registered, nor has it filed a claim of exemption from
registration.
31. Celsius US Holding LLC is not currently registered as a broker-dealer in the state of
Washington and has not previously been so registered.
32. Celsius Network LLC is not currently registered to sell the Earned Interest Program in the
state of Washington and has not previously been so registered, nor has it filed a claim of exemption from
registration.
33. Celsius Network LLC is not currently registered as a broker-dealer in the state of Washington
and has not previously been so registered.
34. Celsius Lending LLC is not currently registered to sell the Earned Interest Program in the state
of Washington and has not previously been so registered, nor has it filed a claim of exemption from
registration.
35. Celsius Lending LLC is not currently registered as a broker-dealer in the state of Washington
and has not previously been so registered.
Based upon the above Tentative Findings of Fact, the following Conclusions of Law are made:
CONCLUSIONS OF LAW
1. The offer and/or sale of the Earned Interest Program described above constitutes the offer
and/or sale of a security as defined in RCW 21.20.005(14) and (17).
STATEMENT OF CHARGES
DEPARTMENT OF FINANCIAL INSTITUTIONS
Securities Division
PO Box 9033
Olympia, WA 98507-
9033
360-902-8760
9
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
2. Celsius Network Inc., Celsius Network Limited, Celsius US Holding LLC, Celsius Network
LLC, and Celsius Lending LLC violated RCW 21.20.140, the securities registration section of the Securities
Act of Washington, by offering and/or selling securities for which no registration is on file with the
Securities Administrator.
3. Celsius Network Inc., Celsius Network Limited, Celsius US Holding LLC, Celsius Network
LLC, and Celsius Lending LLC violated RCW 21.20.040, the licensee registration section of the Securities
Act of Washington, by offering and/or selling said securities while not being registered as a broker-dealer
in the state of Washington.
4. Celsius Network Inc., Celsius Network Limited, Celsius US Holding LLC, Celsius Network
LLC, and Celsius Lending LLC violated RCW 21.20.010, the anti-fraud section of the Securities Act of
Washington, by making untrue statements of material fact or omitting to state material facts necessary to
make the statements made, in light of the circumstances in which they were made, not misleading.
NOTICE OF INTENT TO ORDER THE RESPONDENT TO CEASE AND DESIST
Pursuant to RCW 21.20.390(1), and based upon the Tentative Findings of Fact and Conclusions of
Law, the Securities Administrator intends to order Celsius Network Inc., Celsius Network Limited, Celsius
US Holding LLC, Celsius Network LLC, and Celsius Lending LLC, and their agents and employees, to
each permanently cease and desist from violating RCW 21.20.010, RCW 21.20.040, and RCW 21.20.140.
NOTICE OF INTENT TO IMPOSE FINES
Pursuant to RCW 21.20.395, and based upon the Tentative Findings of Fact and Conclusions of Law,
the Securities Administrator intends to order that Celsius Network Inc., Celsius Network Limited, Celsius US
Holding LLC, Celsius Network LLC, and Celsius Lending LLC shall be jointly and severally liable for and
for and shall pay a fine of $100,000.
//
STATEMENT OF CHARGES
DEPARTMENT OF FINANCIAL INSTITUTIONS
Securities Division
PO Box 9033
Olympia, WA 98507-
9033
360-902-8760
10
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
NOTICE OF INTENT TO CHARGE COSTS
Pursuant to RCW 21.20.390, and based upon the Tentative Findings of Fact and Conclusions of Law,
the Securities Administrator intends to order that Celsius Network Inc., Celsius Network Limited, Celsius
US Holding LLC, Celsius Network LLC, and Celsius Lending LLC shall be jointly and severally liable for
and for and shall pay the costs, fees, and other expenses incurred in the administrative investigation and
hearing of this matter, in an amount not less than $6,500.
AUTHORITY AND PROCEDURE
This Statement of Charges is entered pursuant to the provisions of Chapter 21.20 RCW and is subject
to the provisions of Chapter 34.05 RCW. Celsius Network Inc., Celsius Network Limited, Celsius US
Holding LLC, Celsius Network LLC, and Celsius Lending LLC may each make a written request for a
hearing as set forth in the Notice of Opportunity for Hearing accompanying this Order. If a respondent does
not make a hearing request in the time allowed, the Securities Administrator intends to adopt the above
Tentative Findings of Fact and Conclusions of Law as final and to enter a permanent order to cease and
desist as to that respondent, to impose any fines sought against that respondent, and to charge any costs
sought against that respondent.
SIGNED and ENTERED this 20th day of October, 2021.
__________________________________
William M. Beatty
Securities Administrator
STATEMENT OF CHARGES
DEPARTMENT OF FINANCIAL INSTITUTIONS
Securities Division
PO Box 9033
Olympia, WA 98507-
9033
360-902-8760
11
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Approved by: Presented by:
________________________________ ________________________________
Suzanne Sarason Huong Lam
Chief of Enforcement Financial Legal Examiner
