Canadian Regulators Join the US to Probe Celsius

  • Celsius attracted millions of users with its promise of a 17% return on their investments.

According to reports, Canadian regulators are collaborating with their American counterparts to probe the collapse of the crypto lender, Celsius Network, which caused several projects and users to lose their assets. Celsius reportedly owes $4.7 billion and filed for Chapter 11 bankruptcy protection in July after being unable to repay its debt.

Like other global regulators, Quebec’s Autorité des marchés financiers (AMF), has been looking into the situation since June. The AMF is eager to pursue the case after it was reported that the Caisse de dépôt et placement du Québec, the largest pension manager in the province, invested $150 million in the failed lender.

The Caisse de dépôt invested in Celsius in 2021 as part of a US$400-million financing round. The pension manager at the time called Celsius a “leading global cryptocurrency earning and borrowing platform.” The Canadian pension firm also noted that the investment was geared toward expanding its offerings and products and connecting the crypto market with the traditional capital market.

 The Quebec regulator is also exploring the number of crypto users in the province who invested their funds in Celsius. As a result, Canadian authorities are working with the U.S. Securities and Exchange Commission (SEC) to resolve their concerns since Celsius was not registered with Canadian regulators.

Different states in the US are also working with the SEC to probe Celsius. Regulators in Texas have urged users affected by the crash to come forward, noting that the investigation has been given priority.

During its years of operation, Celsius was mostly seen as a rival to traditional financial service providers. The lending platform attracted millions of users by offering easy loans, swaps, and buying opportunities. Celsius reportedly offered investment returns of up to 17% before its sudden decline.

A former Celsius employee revealed that the crypto lender had run into problems long before it filed for bankruptcy. According to Timothy Cradle, the firm’s former director of financial crimes compliance, Celsius’s biggest undoing was its risk management practices. Top figures in the company were also accused of fraudulent transactions, which left the platform vulnerable.

Another ex-Celsius employee alleged that while CEO Alex Mashinsky convinced regular investors to purchase the CEL token, he discreetly sold it without providing any disclosures to the public. Celsius’ decline gave regulators such as the SEC another reason for the implementation of strict crypto policies.

Lawrence Woriji Verified

Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.

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