U.S. state regulator says it believes crypto lender Celsius is “deeply insolvent”

Multiple state securities regulators are investigating the crypto lending platform after it froze user transfers

July 13, 2022 01:31 pm | Updated 01:50 pm IST

U.S. state regulator says it believes crypto lender Celsius is “deeply insolvent”

U.S. state regulator says it believes crypto lender Celsius is “deeply insolvent” | Photo Credit: REUTERS

Vermont’s Department of Financial Regulation (DFR) on Tuesday said it believes cryptocurrency lender Celsius Network is “deeply insolvent” and does not have the assets and liquidity to honour its obligations to customers and other creditors.

(Sign up to our Technology newsletter, Today’s Cache, for insights on emerging themes at the intersection of technology, business and policy. Click here to subscribe for free.)

The crypto lender has been involved in an unregistered securities offering, selling cryptocurrency interest accounts to retail investors including investors in Vermont, it said in a statement.

Celsius also lacks a money transmitter license and until recently was operating largely without regulatory oversight, it said.

“Due to its failure to register its interest accounts as securities, Celsius customers did not receive critical disclosures about its financial condition, investing activities, risk factors, and ability to repay its obligations to depositors and other creditors,” the regulator said.

Celsius did not immediately respond to Reuters’ request for comment.

The state agency said it has now joined a multistate investigation of Celsius.

State securities regulators in Alabama, Kentucky, New Jersey, Texas, and Washington are investigating Celsius’s decision to suspend customer redemptions.

Last month, Celsius froze withdrawals and transfers, citing “extreme” market conditions, leaving its 1.7 million customers unable to redeem their assets.

The retail crypto lending platform later said it was exploring options including deals and restructuring its liabilities.

Several crypto companies have run into difficulties after a sharp sell-off in the market for digital currencies seen in recent months.

Top News Today

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.