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Crypto lending platform Celsius Network misled investors about their financial standing. Vermont’s Department of Financial Regulation (DFR) said the company is using the CEL token to strengthen its
Crypto lending platform Celsius Network misled investors about their financial standing. Vermont’s Department of Financial Regulation (DFR) said the company is using the CEL token to strengthen its balance sheet and funds from new customers to pay off obligations to existing ones.
The DFR filing with the bankruptcy court said: “This points to a high level of breaches and also, at least at some point, existing investors were paid a return on the assets of the new clients.”
According to the regulator, Celsius “through its CEO Alex Mashinsky and otherwise” made false and misleading statements about the company’s financial health, profitability, compliance with securities laws, and ability to meet its obligations to investors.
In particular, DFR drew attention to a tweet by Mashinsky dated July 31, 2021, in which he claimed Celsius “makes profits and always acts in the interests of its users.”
Other guys need to raise money every few months because they are already subsidizing their low rates and making all their income from wages.
That’s why Celsius is profitable and always acts in the best interests of its users, while Blockfi has hidden fees and takes commission from you on every move.
— Alex Mashinsky (@Mashinsky) July 31, 2021
“In fact, preliminary analysis of financial filings provided to a group of regulators in several states showed Celsius suffered major losses in the first seven months of 2021. In addition, the company experienced two major adverse events in June and July,” it says.
According to department officials, Celsius manipulated the CEL price by accumulating tokens to strengthen the balance sheet.
“The company has inflated and maintained its market price, increasing its net position in CEL by hundreds of millions of dollars. [токена]thus improving the balance sheet in the financial statements. Except for this liability item [Celsius] would have exceeded their holdings since at least February 28, 2019. This app can enrich the contents of the platform,” said DFR.
The regulator also pointed to a tweet from Celsius head in May 2022 in which he stated that the company has not suffered significant losses and its funds are safe.
Despite the extreme market volatility, Celsius did not suffer any significant losses and all funds are safe.
— Alex Mashinsky (@Mashinsky) 11 May 2022
According to DFT, in just 10 days in May 2022, Celsius suffered more than $450 million in losses, emphasizing that an independent expert should investigate the platform’s activities in connection with these facts.
On July 13, Celsius filed for Chapter 11 bankruptcy in New York court. The company said its liabilities exceed its balance sheet assets by approximately $1.2 billion.
According to the revised estimate, the “hole” in the platform’s balance sheet was $2.85 billion.
Recall that in August 2022, the US Board of Trustees raised “lots of questions” to the Celsius leadership.
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I’m Sandra Torres, a passionate journalist and content creator. My specialty lies in covering the latest gadgets, trends and tech news for Div Bracket. With over 5 years of experience as a professional writer, I have built up an impressive portfolio of published works that showcase my expertise in this field.
