Celsius Vermont

Vermont Authority Investigates Celsius, Says Its “Deeply Insolvent”

  • The Department of Financial Regulation of Vermont believes that Celsius is “deeply insolvent”
  • DFR believes that Celsius doesn’t have enought liquidity and assets to pay off creditors

According to the United States’ state of Vermont’s Department of Financial Regulation (DFR), the struggling crypto lending platform Celsius Network “is deeply insolvent.”

DFR noted that the lender does not have enough assets and liquidity to honor its obligations to account holders and other creditors.

“Celsius deployed customer assets in a variety of risky and illiquid investments, trading, and lending activities.”

the statement by the regulator reads.

DFR alleged that Celsius Network compounded these risks “by using customer assets as collateral for additional borrowing to pursue leveraged investment strategies.”

Notably, a recent report by Blockchain analytics company Arkham Intelligence claims that Celsius entrusted corporate money worth around $530 million to an asset director 0xb1 who was engaged in high-risk leveraged trading strategies. There was an apparent $350 million loss as a result of these extremely risky trading techniques.

The DFR considers Celsius’s sale of cryptocurrency interest accounts to retail investors to be “an unregistered securities offering.” Additionally, DFR claims that Celsius does not have a money transmitter license, which indicates that Celsius previously was not complying with regulations while operating.

The lender also neglected to register its interest accounts as securities, which prevented depositors and other creditors from being informed of any risks.

According to the statement, DFR has joined a multistate inquiry against the lender as a result of the convergence of the concerns regarding Celsius.

Will the Celsius Network survive?

The latest liquidity crisis in the crypto market has seriously affected the crypto lenders, including Celsius Network. On June 12, the lender announced the suspension of withdrawals with plans to cut jobs and hire restructuring advisors at a later date.

Despite the ongoing liquidity crisis, Celsius Network is trying its best to cope with the situation. Last week, Celsius Network paid off its debt on the DeFi lending protocol Maker, freeing $440 million of collateral pledged against the loan. In addition, the company has recently moved $418 million in staked ether to an unknown wallet. 

Earlier on July 12, Celsius reduced its debt by $95 million on the DeFi protocol Aave, further freeing up 410,000 stETH tokens, worth around $426.5 million at the current market price.

Parth Dubey Verified

A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.

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