Wednesday, October 5, 2022

Vermont Joins Other US States to Investigate Celsius

With the crypto industry under the lens of regulators after the Terra crash, investigations into the troubled crypto lender Celsius have continued. Regulators in Vermont believe the lender is in no position to honor its obligations to creditors.

According to a statement by the State’s Department of Financial Regulation (DPR), it claims Celsius is deeply insolvent. It also lacks the asset and liquidity to honor its obligations to its creditors and account holders.

Additionally, the DPR claims the crypto lender mismanaged investors’ funds. It said Celsius deployed customer assets in a variety of risky and illiquid investments.

DPR says Celsius has no transmitter license to operate in the state which means the firm was operating without regulatory oversight. This is said to expose retail Investors to high-risk investments which led to huge losses.

Furthermore, the lender also failed to register its interest accounts as securities. This led to a lack of risk disclosures to depositors and other creditors.

The agency believes Celsius remaining assets may not be enough to clear its outstanding liabilities to Vermont residents.

Vermont becomes the sixth US state to launch an investigation into Celsius. It joins the likes of New Jersey, Alabama, Kentucky, Washington, and Texas in probing the activities of the embattled company.

Recall that in a bid to stabilize liquidity and operations, the crypto lender halted withdrawals on its platform last month. It also reportedly laid-off about 23% of its workforce.

Last week, KeyFi, a Decentralized finance (DeFi) aggregator, filed a lawsuit against the embattled crypto lender. The former partner is accusing Celsius of fraud after discovering that it lied about hedging against market fluctuations.

Currently, the firm is working on restructuring plans to avoid bankruptcy. It has also hired legal teams to advise on its financial situation.

Earlier in the week, it freed up over $500 million in Wrapped Bitcoin (wBTC) collateral after repaying some of its Defi loans. It paid $20 million in USD coins (USDC) to Aave. It has also cleared its loan with Maker Protocol after repaying $41.2 million.

Joyce Onose
A Blockchain enthusiast and growing writer in the space with an understanding of the importance in creating quality content for readers in the industry. Also, keen on using her skills in improving Blockchain journalism.

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