Celsius Continues To Be Investigated By US Legal Authorities

Celsius Network, the troubled crypto lender, “is deeply insolvent,” alleged the U.S. state of Vermont’s Department of Financial Regulation (DFR), noting that the lender lacks the assets and liquidity to honor its obligations to account holders and other creditors.

DFR believes the lending company entered into an unregistered securities offering by offering a crypto interest account to retail investors. According to the DFR, Celsius also lacks a money transfer license, which means the company has operated largely without regulatory oversight ever since.

“Celsius deployed customer assets in a variety of risky and illiquid investments, trading, and lending activities. Celsius compounded these risks by using customer assets as collateral for additional borrowing to pursue leveraged investment strategies.”

The lending company did not register its interest accounts as securities, resulting in non-disclosure of risks to depositors and other creditors. As concerns about this matter have escalated, DFR has decided to conduct an investigation for clarification.

Basically, the arguments made by the DFR are somewhat coincidental with the questions that have been raised against Celsius in the past week.

The California Department of Financial Protection and Innovation (DFPI) is also investigating several US-based crypto lenders after a series of prominent lending institutions indefinitely halted withdrawals. funds and transfer funds between user accounts.

While the DFPI did not name the companies under investigation, it said it is keeping an eye on many companies that offer customers interest-bearing or interest-bearing crypto-asset accounts and service providers may not fully disclose the risks that customers face when they deposit their funds into the platform.

The chances of DFPI targeting Celsius are high because the agency has pursued similar investigations into BlockFi and Voyager Digital in recent months. Not only that, but DFPI has found that certain crypto interest accounts from those platforms constitute unregistered securities.

The government circles of Vermont and California are just the latest to start taking aim at Celsius. In fact, in mid-June 2022, Celsius was under pressure from securities regulators of 5 states in the US including Texas, Alabama, Kentucky, New Jersey, and Washington.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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