Alleges Vermont Department of Financial Regulation said that they believe that the cryptocurrency lending platform Celsius is deeply insolvent. They also alleged Celsius Network lacks the assets and cash to pay its debts. “Due to its failure to register its interest accounts as securities, Celsius customers did not receive critical disclosures about its financial condition, investing activities, risk factors, and ability to repay its obligations to depositors and other creditors”, the regulators at the Alleges Vermont Department of Financial Regulation said.
Celsius Network lacked regulatory control and a money transmitter license, according to officials. It has been operating in multiple jurisdictions and offered unregisters securities including cryptocurrency interest accounts to retail investors.
Alleges Vermont Department Of Financial Regulation Believes Crypto Lender Celsius Is ‘Deeply Insolvent’
The state agency has started a multistate investigation of the Celsius Network. The Celsius Network has decided to suspend customer redemptions and the state securities in Alabama, Kentucky, New Jersey, Texas, and Washington have decided to investigate this decision.
Celsius used consumer assets for dangerous investments, trading, and loans, officials said. Celsius compounded these risks by using customer assets as collateral for additional borrowing to pursue leveraged investment strategies”. The Celsius Network stopped withdrawals on June 12 amid the latest crypto liquidity crisis. They also hired restructuring experts to get expert advice on this financial crisis.
The officials at Celsius Network claimed that they had fully paid off its debt on Aave, a decentralized finance protocol, freeing up around $26 million in tokens. The network also moved $418 million in staked ether or stETH to an unknown wallet. Celsius also repaid their loan on Maker, a DeFi lending protocol thus freeing up $440 million in wrapped bitcoin (WBTC) tokens.
Celsius Network halted withdrawals and transactions in June due to the crypto market turmoil. This left around 1.7 million customers of Celsius unable to redeem their assets. Celsius Network said they were examining other possibilities, including deals and restructuring their liabilities, when they froze withdrawals and transfers.
As per the crypto market rumors spreading, online forums are available for investors to participate in a short squeeze of the Celsius token, CEL. These online forums promote CEL and encourage users to buy it, which drives up its price. Many crypto lending platforms and companies are now facing insolvency due to the worse market condition.