Another US state has just launched an investigation into the firm. The US state of Vermont’s Department of Financial Regulation (DFR) has made serious allegations against the troubled crypto lender.
Vermont Watchdog Statement on Celsius
In a recent statement, the DFR said it believed Celsius was “deeply insolvent” and that the company lacked the assets and cash to meet its obligations to account holders and other creditors.
The DFR also argued that Celsius Network operated in multiple jurisdictions, including Vermont, and claimed the company had engaged in an unregistered security offering to retail investors. He also pointed out that Celsius does not have a money transmitter license and may have operated largely without regulatory oversight.
Citing those concerns, the Department announced it was teaming up for a multi-state Celsius investigation. He also noted that claims by Celsius and its CEO regarding the safety of customer funds as well as the lender’s ability to meet withdrawal obligations are also false.
In mid-June, Celsius halted all withdrawals, exchanges and transfers between client accounts. As it battled the financial crisis, the lender laid off some 150 employees soon after. He brought in restructuring consultants from a consulting firm, Alvarez & Marsal, with the aim of “preserving and protecting assets”.
“Celsius has not disclosed adequate or complete information to the public to enable investors to make informed purchases and sales of CEL. Investors who purchase CEL tokens take the risk that the value of these tokens will decline sharply or even become worthless in the future. Concerted efforts to manipulate the price of CEL may also violate state and federal laws.
Celsius hasn’t exactly been transparent and opted for secrecy to avoid bankruptcy. Due to its refusal to disclose its financial records, the lender lost $6 billion in cash from potential investors.
Earlier this month, a report by blockchain analytics firm Arkham Intelligence speculated that Celsius may have used client funds to execute high-risk crypto trading strategies.
Crypto Lenders in Hotbed
In addition to Celsius Network, several crypto lenders, including Voyager Digital, have experienced financial turmoil.
The U.S. Department of Financial Protection and Innovation (DFPI) in California is currently investigating several companies offering customer “interest-bearing crypto asset accounts” offerings that may have failed to adequately disclose the risks customers are at. faced when depositing crypto assets on their platforms.
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