Celsius is deeply insolvent, cannot meet payout obligations: Vermont supervisory authority
Celsius is deeply insolvent, cannot meet payout obligations: Vermont supervisory authority
- Celsius is not licensed in Vermont and offers not registered securities offers, said the agency
- The lender used customer funds for risky and illiquid investments, trade and lending, he added
The battered cryptocurrency loan Celsius, according to the financial supervisory authorities, is unable to fulfill payout obligations or to repay loans to creditors.
The State Ministry of Finance "believes that Celsius is deeply insolvent and does not have the assets and liquidity in order to meet his obligations towards account doors and other creditors," said the state supervisory authority in a statement on Tuesday.
Celsius, which is not licensed in Vermont, used customer assets for various risky and illiquid investments, commercial and credit transactions, said the supervisory authority. It is of the opinion that users are affected in the state and that the company's assets may not be sufficient to cover outstanding liabilities.
The supervisory authority said Celsius made small investors an unregistered securities offer and had no money transverse license. It also accused the company to have made CEO Alex Mashinsky and other Celsius representatives to have made false statements about the security of customer funds and its ability to fulfill obligations.
"Due to the failure to register his interest accounts as securities, Celsius customers received no critical information about his financial situation," added.
Vermont has initiated a federal investigation of the business of the lender, which Alabama, Kentucky, New Jersey, Texas and Washington joins.
Celsius did not answer the request from Blockworks for comment until the editorial deadline.
Simon Dixon, CEO of the BnktotheFuture investment platform, himself a Celsius shareholder, described a proposed renovation plan for the lender on Tuesday and said that he had secured up to $ 6 billion in liquidity to solve his problems. He also asked Mashinsky to make the company's finances transparent. But the company rejected the offer and Mashinsky did not make its finances public.
"The only reason you would not pursue [a lucrative round of investment] is there still something going on?"
Celsius is best known for offering high returns of up to 18 % on its crypto deposits. These high interest rates were earned by lending to other institutional investors and by defi protocols. It is previously Celsius showed more than $ 8 billion to customers and in May gave almost $ 12 billion US dollar, but these data seem to have been deleted now.
The company recently replaced its former lawyers Akin Gump Strauss Hauer & Feld LLP, who only rented in mid-June, with new Kirkland & Ellis-the same law firm digitally at its Insolvency proceedings supported. A source familiar with the matter said Blockworks in an interview that it was "quite possible" that Celsius could also go into bankruptcy.
The cryptocurrency loan Fror on June 12th withdrawals on his platform "to stabilize liquidity and operation", and reports about 23 % of his workforce shortly afterwards. Celsius is also said to have opposed the advice of his own lawyers to register bankruptcy and claimed that user support would help to avoid the tedious process. It has recently started repaying its debts at AAVE and Compound to release collateral that are parked in the decentralized financial protocols.
The concentrated positions of Celsius on less liquid assets such as Steth (Staked Ether) led to his liquidity crisis. This delicate situation, coupled with the breakdown of the Terrausd Stablecoins and an unsafe macroumpfeld, has caused devastating damage to the financial markets.
Cel-token from Celsius has fallen 66 % since the beginning of May, approximately at the time of the depegging of Terrausd. It was last traded at $ 0.72 on Wednesday, data from Blockworks-research
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The contribution Celsius is "deeply insolvent", cannot meet payout obligations: the Vermont regulatory authority is not a financial advice.