No surprise here! In a court filing, Vermont’s Department of Financial Regulation (DFR) described the bankrupted Celsius Network as a vast Ponzi scheme. Allegedly the crypto lender had used new investor funds to repay existing investors and misled investors about its financial health. Moreover, according to the court filing, the crypto lender may have “engaged in the improper manipulation of the price” of the platform’s CEL tokens to boost it’s balance sheet. The Chapter 11 case easily develop into a cybercrime case.
The Vermont Department of Financial Regulation (DFR) submitted the filing on Wednesday in support of the United States Trustee’s motion to appoint an independent examiner in the Celsius Chapter 11 case.
According to tot the DFR filing, at least 40 state securities regulators were engaged in a multistate investigation arising from, inter alia, concerns about potential unregistered securities activity, mismanagement, securities fraud, and market manipulation by Celsius and its principals. At a minimum, Celsius has been operating its business in violation of state securities laws.
DFR said that the investigation showed that Celsius, through its CEO Alex Mashinsky and otherwise, made false and misleading claims to investors about the company’s financial health and its compliance with securities laws, both of which likely induced retail investors to invest in Celsius or to leave their investments in Celsius despite concerns about the volatility of the cryptocurrency market.
