The state of Vermont is the sixth state in the United States to initiate an investigation into Celsius Network
Vermont’s Department of Financial Regulation (DFR) has issued a statement saying that Celsius Network, a troubled crypto lender, is insolvent. Crypto lending platform Celsius has been unable to process client withdrawals for the last month because of volatile market circumstances. Vermont is now the sixth US state to launch an investigation into the crypto lender.
Because of this, the state’s financial watchdog ruled that Celsius Network cannot provide any investment services in the state due to the fact that its high-interest cryptocurrency accounts are unregistered securities.
According to DFR, Celsius operated with little regulatory control and exposed retail consumers to high-risk investments that resulted in significant losses for the latter group of clients.
“In addition to the ordinary risks of cryptocurrency investing, holders of Celsius interest accounts were also exposed to credit risk that Celsius would not be able to return their tokens upon withdrawal. The Department believes Celsius has been engaged in an unregistered securities offering by offering cryptocurrency interest accounts to retail investors. Celsius also lacks a money transmitter license. The Department has joined a multistate investigation of Celsius arising from the above concerns.”
In other news, crypto lenders such as Celsius Network and others that have restricted or blocked client withdrawals and transfers may be in hot water with California regulators.
The California Department of Financial Protection and Innovation (DFPI) said on Tuesday that it is examining various crypto lending services operating in the United States.
Even though it did not name specific companies, the California Department of Financial Protection (DFPI) said it is looking into companies that offer customers interest-bearing cryptocurrency accounts but may not adequately disclose the risks customers face when depositing crypto assets onto their platforms.
As a result of Voyager Digital’s abrupt suspension of withdrawals earlier this month and subsequent announcement of Chapter 11 bankruptcy, Celsius is also likely to be targeted.