Celsius Confesses that Business Never Made Sufficiently Revenue to Fund Yields.
The Vermont Department of Financial Regulation has accused Celsius of running a Ponzi scheme. The financial watchdog said that the crypto lender has been insolvent since 2019.
In a bombshell new filing, the Department said that Celsius was “effectively insolvent” and that its financial analysis “suggests that at least at some points in time, yields to existing investors were probably being paid with the assets of new investors.”
The filings further claim that Celsius itself confessed to investigators “that the company had never earned enough revenue to support the yields being paid to investors.”
The Texas State Securities Board(SSB) has also said that the crypto lender is insolvent and deceives the public. The SSB says that “the representations of the debtors regarding their financial status in the bankruptcy case have been inconsistent at best.” SSB agrees with the Vermont Department of Financial Regulation claims, pointing out numerous instances where it thinks Celsius deceived the public.
For instance, SSB referenced a blog post from June 7 in which Celsius informed consumers that even though it was only five days away from stopping withdrawals, it would continue to allow investors to withdraw their money.
Additionally, it is accused in the Vermont petition that Mashinsky deliberately misled investors by falsely claiming that it had fixed all concerns from state securities regulators in December.
Vermont’s filing alleges that Celsius had manipulated the price of its native CEL token. According to the regulator, between May 2 and July 1, when withdrawals were stopped, Celsius’ holdings of CEL increased by more than 40 million tokens–more than half of which occurred after the platform was suspended. The regulator alleges that Celsius also took part in this activity at some point in 2021. Without the CEL position, liabilities would have outnumbered assets since February 2019.
Celsius has been in trouble since December 2021, when it lost $54 million worth of Bitcoin that it had deposited with the BadgerDao DeFi platform after being hacked. Celsius CEO Alex Mashinsky said the firm incurred losses, but he didn’t specify how much they were.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
