Celsius allegedly ran a Ponzi-like scheme

Evidence in the filings of the state securities regulator shows Celsius’s finances were already unstable before the crypto market in 2022.

One of the victims of the crypto market downturn in July Celsius is suspected of having used a Ponzi-like scheme to pay the interest. The Vermont Department of Financial Regulations filed a lawsuit against the C network above. Accordingly, ask the judge to oversee Celsus’ bankruptcy by appointing an independent examiner.

The Trusteeship Office, a branch of the Department of Justice in charge of bankruptcy cases, wants an independent investigation into the surrounding Celsius crash. And Vermont’s latest filing adds a deeper claim.

Contents of the allegation

First, Celsius’ assets evaporated long before crypto winter. The company’s management has “kept the large loss, deficit and deteriorating financial situation secret from investors. The allegation also states that C never earned the revenue needed to pay the returns they promised.

“This shows a level of financial mismanagement and also suggests that it is possible that at some point the returns of existing investors could be paid off with the assets of new investors.”

Second, Vermont alleges that Celsius is using its native CEL token to balance its balance sheet: Credibility claims have been confirmed publicly, through letters to this Court and if not, that Celsius and its management engaged in CEL price manipulation, including by using investor deposit proceeds to obtain CEL and increase net positions.

By increasing its net position in CEL to hundreds of millions of dollars, Celsius has increased and enhanced the market price of CEL. Thus pushing the “fake” of the company’s CEL holdings up on the balance sheet and financial statements. Excluding the Company’s Net Position in the CEL, liabilities would exceed the assets of the company at least as of February 28, 2019. These practices may also have helped Celsius insiders. more or less out of pocket, at the expense of retail investors. But even when CEL reserves are included, liabilities are reported to be much higher than Celsius’ assets as the end date draws near.

Third, Vermont alleges that Celsius and CEO Alex Mashinsky have repeatedly reassured the public about the state of the company’s business, when in fact “catastrophic losses”. To that end, Celsius concealed shabby reality.

On May 11, 2021, CEO Alex reassures Celsius users:

All funds are safe. We continue to open for business as usual As part of our responsibility to serve our community, Celsius is implemented and adheres to robust risk management frameworks to ensure the safety and security of our customers. assets on the platform.

But Vermont said, in fact:

“Preliminary internal financial records provided by Celsius to members of the multinational management team show that Celsius experienced an unrealized loss of approximately $454,074,042 between May 2 and 12. May 2022. The company has defaulted on loans and unsafe deposits.”

On July 31, 2021, Mashinsky tweeted that:

1. Blockfi has 2% initiation fee on loans

2. Celsius has a POC rewards explorer

3. Code HODL500 double pay

4. CEL has 6 sources of profit

5. CEL Treasury 350 million ($2 billion)

But in the reality . . .

“Preliminary analysis of the financial records provided to the multinational group of regulators shows that Celsius suffered large losses in the first seven months of 2021. It also experienced two severe adverse events. in June and July 2021.

About 40 state securities regulators are currently reviewing Celsius because of “concerns about potential unregistered securities activity, mismanagement, securities fraud and market manipulation by Celsius and its companies.” its master.”

The Texas State Securities Commission (SSB) filed a similar petition claiming that in addition to the slow response time and incomplete submissions from C regarding the requested information and documentation, “the Debtor’s representation of their financial position in the event of bankruptcy is inconsistent.”

Those investigations were repeatedly brought up in the lender’s Chapter 11 bankruptcy proceedings, with the U.S. Commissioner of the Department of Justice and the judge in the case requesting more information. Now, regulators are sharing key findings to support the U.S. People’s Committee’s recommendation to designate an assessor to Celsius.

“At a minimum, Celsius was operating in business in violation of state securities laws,” according to the Vermont filing. “That inappropriate conduct alone warrants investigation by a neutral party.”