Celsius Slapped With Fresh Accusations By Vermont State DFR

Paigambar Mohan Raj
Source: YouTube, How It Happened

After Celsius moved closer to settling its liquidity issues, the firm was slapped with fresh allegations. The new allegations come from the Vermont Department of Financial Regulation (DFR).

According to a statement released by the Vermont DFR,

“Celsius is deeply insolvent and lacks the assets and liquidity to honor its obligations to account holders and other creditors. “

The department accuses the company of deploying customer assets in risky investments that do not have liquidity.

As per the statement,

“Celsius compounded these risks by using customer assets as collateral for additional borrowing to pursue leveraged investment strategies.”

Furthermore, the department said that some of the company’s assets are illiquid, making the assets difficult to sell, or the sale could lead to losses.

The department highlights that Celsius is not licensed in Vermont and believes that Celsius was involved in an unregistered securities offering. The statement also says that the company does not have a money transmitter license and, therefore, was operating without much oversight.

The company also did not register its interest accounts as securities. Hence, customers were unaware of the company’s activities, financial condition, risks, and ability to repay creditors.

Due to the causes mentioned above, the Vermont DFR has launched a multi-state investigation of Celsius.

The department says,

“Previous representations made by the Company, its CEO, and other Celsius representatives about the safety of customer funds and the company’s ability to meet withdrawal obligations are untrue. “

Was Celsius involved in a “short squeeze”?

The DFR statement mentions online forums asking investors to participate in a short squeeze of CEL. CEL is Celsius’s native token.

According to the DFR,

“These forums encourage people to purchase CEL tokens in order to drive up the price of the token, thereby hurting individuals who may hold a “short” position in CEL.”

The department has accused the firm of not disclosing enough information to the public for investors to make proper decisions. The department has warned investors that the CEL token could decrease in value or become worthless. Adding that,

“Concerted efforts to manipulate the price of CEL may also violate state and federal laws.”

Celsius’s troubles don’t seem to end. Moreover, the new allegations come right after the company regained $410 million of its staked Ether (stETH). The firm was a big stETH holder and was blamed for stETH losing its 1:1 peg to Ether. Additionally, Celsius paid over $81 million in debt to AAVE. However, the company still owes around $59 million to Aave and Compound Finance.