Celsius Accused of Misleading Investors by U.S. Regulators

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Alex Dovb­nya

Cel­sius is under fresh reg­u­la­to­ry scruti­ny in the US fol­low­ing the fir­m’s collapse 

Accord­ing to a Fri­day report by The Wall Street Jour­nal, Ver­mont reg­u­la­tors believe that embat­tled cryp­tocur­ren­cy lender Cel­sius Net­work mis­led investors about the state of its finances.

Dur­ing his tes­ti­mo­ny, chief finan­cial offi­cer Chris Fer­raro revealed that the company’s finan­cial loss­es dat­ed back all the way to 2020. While the sum­mer mar­ket cor­rec­tion pre­cip­i­tat­ed the fall of one of the lead­ing cryp­tocur­ren­cy lenders, it is now clear that its trou­bles start­ed way earlier.

At the same time, the company’s lead­er­ship, includ­ing CEO Alex Mashin­sky, kept mak­ing upbeat state­ments about the lender’s finan­cial health. Last year, Mashin­sky claimed that the firm was prof­itable even though it was deal­ing with loss­es of “cat­a­stroph­ic” pro­por­tion at that time. 

Cel­sius wasn’t able to gen­er­ate enough rev­enue to afford high yield rates which were a major draw for cus­tomers. In fact, the com­pa­ny had to use fresh investor funds in order to pay interest.

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The report says that this could poten­tial­ly qual­i­fy as secu­ri­ties fraud.

As report­ed by U.Today, Cel­sius filed for bank­rupt­cy in mid-July. 

Mashin­sky con­firmed that the com­pa­ny had a $1.2 bil­lion hole in its bal­ance sheet.

In ear­ly Sep­tem­ber, Cel­sius asked the court to resume with­drawals for some users. The com­pa­ny said that it was only the first step on its path to recov­er­ing cus­tomers’ money.

Cel­sius abrupt­ly sus­pend­ed with­drawals on June 12, which marked the company’s demise.

The failed cryp­to lender had rough­ly $12 bil­lion worth of assets under man­age­ment as of May.

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