Crypto lending startup Celsius ends new transfers for non-accredited investors in U.S.

Crypto lending startup Celsius has announced major changes for U.S. customers. This comes amid scrutiny from at least three U.S. states concerned that its product might be an unregulated securities offering.

Why it matters: Celsius is a startup that allows consumers to deposit crypto and borrow crypto, as well. The interest rate for borrowers pays for the returns on deposits. It's been a great way for long-term holders to grow their holdings, but this opportunity to earn yield has Texas, New Jersey and Alabama giving it major side-eye.

• Context: For example, deposits of Pax Gold, a gold derivative on the Ethereum blockchain, can earn up to 7.21% annually on Celsius. Free gold!
• In November, Celsius announced that it had distributed $1 billion in yield to its users.

Driving the news: Celsius announced this week that U.S. users wouldn't be able to make deposits into its earning programs any longer, unless they are accredited investors.

• "Accredited investor" basically means "rich person" or finance professional. There are guidelines to be met to qualify, but the term makes it sound like some official list exists — it does not.
• The cutoff kicks in on April 15, and any U.S. investor already in a yield earning pool before then can keep earning until they get out.

• Celsius did not respond to requests for comment.

Celsius started in 2018 with a $50 million initial coin offering (ICO). It raised $750 million last year at a $3.25 billion valuation.

• Zooming out: BlockFi, a company with a very similar business model in many ways, agreed to a $100 million settlement in February with U.S. regulators and those of several states.

Quick take: The conditions listed in Celsius' blog are so hyper-specific that one can hear the whispers of "negotiated deal." A consent decree or settlement could be revealed shortly.