Celsius Network, the embattled crypto lender, is “deeply insolvent,” according to the Department of Financial Regulation (DFR) in the U.S. state of Vermont.
“The Department believes Celsius is deeply insolvent and lacks the assets and liquidity to honor its obligations to account holders and other creditors,” an official release stated.
The platform, which is unlicensed in the state, suspended withdrawals, swaps, and transfers on June 12, and hired experts to advise on its fate.
Celsius held around $12 billion in assets as of mid-May. But amid the crypto collapse and liquidity crisis within the sector, hired attorneys to aid the platform in the restructuring process.
The company replaced its former lawyers Akin Gump Strauss Hauer & Feld LLP, which it hired only in mid-June, with new ones from Kirkland & Ellis – the same law firm helping Voyager Digital in its bankruptcy proceedings.
Earlier this week, it began to repay its debts to Aave and Compound in order to free up collateral parked in the decentralized finance protocols. A total of $172 million was freed up.
Celsius engaged in unregistered securities
“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. This means that until recently, Celsius was operating largely without regulatory oversight,” said the DFR.
In the past year, state regulators of New Jersey, Texas, and Alabama among other agencies have barred the platform from offering interest-bearing products.
Celsius is also facing a lawsuit from its former employee for allegations of market manipulation, risk management failures, mismanagement, and accounting fraud, amid claims of running a Ponzi scheme.
The agency has also raised concern that “concerted efforts to manipulate the price of CEL (the native token) may also violate state and federal laws,” predicting that the token will become “worthless” in the future.
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Source: https://beincrypto.com/celsius-deeply-insolvent-says-vermont-financial-regulator/