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Crypto Lender 'Celsius Is Deeply Insolvent’, Says Vermont’s Financial Regulator

13 Jul, 20222 min readRegulation
Crypto Lender 'Celsius Is Deeply Insolvent’, Says Vermont’s Financial Regulator

On Tuesday, the Vermont Department of Financial Regulation (DFR) alerted investors to exercise caution with the crypto lender Celsius.

It called the lender “deeply insolvent” and operated without a proper license.

The New Jersey-based firm offered interest-bearing products for cryptocurrency depositors on the platform.

Celsius deployed its customer funds across high-risk and illiquid investment, trading and lending activities according to the alert.

Most of the assets currently held by Celsius are illiquid, with the chances of the firm repaying their debt obligations low, according to the Vermont-based regulator.

“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,” read the alert issued by Vermont’s DFR.

The regulator also indicated that the firm is not licensed to operate in Vermont, and had been involved in offering unregistered securities via its crypto interest accounts.

“The Department believes Celsius has been engaged in an unregistered securities offering by offering cryptocurrency interest accounts to retail investors,” read the alert. “Celsius also lacks a money transmitter license. This means that until recently, Celsius was operating largely without regulatory oversight.”

Celsius in hot water

The DFR’s alert is only the latest in what has been a slew of bad news for the firm.

On June 13, Celsius announced its decision to pause operations, citing “extreme market conditions” in a blog post.

Following the announcement, the firm's CEO Alex Mashinsky offered investors confidence, assuring them that the firm was “focused on your concerns and thankful to have heard from so many. To see you come together is a clear sign our community is the strongest in the world. This is a difficult moment; your patience and support mean the world to us.”

Mashinksy’s last recorded Twitter activity was on June 30.

Vermont’s DFR also makes up a broader multistate investigation into the troubled crypto lender.

Security regulators in numerous states, including Alabama, New Jersey, Texas, and Washington, all began their investigation into Celsius last month.

CEL, the firm's native token, trades at $0.73, up just 0.13% over the past 24 hours.

The token is down 91% from its all-time highs of $8.02, recorded in June 2021, according to data from CoinMarketCap.

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