Connect with us

Hi, what are you looking for?

TOP news

Crypto lender Celsius is ‘deeply insolvent’ and does not have the ability to meet obligations to creditors or account holders, state regulator warns

Piaras Ó Mídheach/Sportsfile for Web Summit via Getty Images

  • Vermont regulators warned this week that crypto firm Celsius is “deeply insolvent”. 
  • The crypto lender is being investigated by multiple state authorities after halting customer withdrawals in June.
  • A statement yesterday warned investors to “proceed with caution” and avoid making additional payments.

Celsius Network, the crypto lender that recently froze customer withdrawals due to liquidity concerns, is likely “deeply insolvent” and doesn’t have assets to meet obligations to its creditors or its account holders, the Vermont Department of Financial Regulation warned this week.

The crypto player has been under scrutiny since it paused withdrawals in June, locking customers out of nearly $12 billion in digital assets. The company also stopped holding Q&A sessions with customers on its social media platforms, claiming in a blog post it needed to “focus on navigating these unprecedented challenges.” 

Celsius has since slashed its workforce, spoke with consultants to restructure its finances, and paid off $95 million of its debt, CoinDesk reported, with over $50 million to go. But Vermont regulators warned investors to “proceed with caution” in a statement on Tuesday.

“Celsius deployed customer assets in a variety of risky and illiquid investments, trading, and lending activities,” the regulator said, adding that Celsius also used customer assets to put down collateral for other loans, which likely contributed to its liquidity problems.

“The company’s assets and investments are probably inadequate to cover its outstanding obligations.”

That’s contrary to what Celsius execs have said to ease concerns from customers. Shortly after halting withdrawals, Celsius Chief Executive Alex Machinsky said the company was working “non-stop,” and thanked lender customers for their support.

“To see you come together is a clear sign our community is the strongest in the world,” Machinsky tweeted.

But according to the Vermont regulator, the firm is mostly unregulated and is not required to disclose financial risks to its customers, since it does not have a money transmitter license and did not register its interest accounts to investors as securities. 

Vermont regulators have joined an multistate investigation of Celsius, which will look into the firm’s possible insolvency. Alabama, Kentucky, New Jersey, Texas, and Washington regulators are also taking part, Reuters reported.

Meanwhile, the Vermont agency discouraged investors from making additional investments and payments to Celsius and to be skeptical of any company communication.

“Previous representations made by the Company, its CEO and other Celsius representatives about the safety of customer funds and the company’s ability to meet withdrawal obligations are untrue,” the statement said. 

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

TOP news

Paul Sancya/AP On June 2, Delta will become the first US airline to pay its flight attendants for boarding time. Previously, flight attendants were...


Adeline van Houtte is the Economist Intelligence Unit’s lead analyst on Russia. It looks like Russia is at it again, after the unusual movement...


The EU should play an active role in the upcoming U.S.-Russia talks over security concerns around Ukraine, the bloc’s top diplomat told German media...

TOP news

US Navy aircraft carrier USS Carl Vinson leads other US Navy ships during an exercise with the Indian navy in 2012. US Navy Photo...