Vermont’s Department of Financial Regulation (DFR) issued a warning against troubled crypto lending firm Celsius on Tuesday, reminding users that the crypto lending firm is not licensed to offer its services in the state.
The DFR alleged that Celsius is “deeply insolvent” and doesn’t possess “assets and liquidity” to fulfill its obligations towards the customers. The state regulator accused the crypto lender of mismanaging customers’ funds by allocating them towards risky and illiquid investments.
“In addition to the ordinary risks of cryptocurrency investing, holders of Celsius interest accounts were also exposed to credit risk that Celsius would not be able to return their tokens upon withdrawal.”
The financial regulator noted that the high crypto interest account offered by Celsius qualifies as unregistered security and the firm also lacks a money transmitter license to offer any investment services in the state.
DFR believes Celsius operated without any regulatory oversight and exposed retail customers to high risks investments resulting in heavy losses for them. Keeping these concerns in mind, the state financial regulator has joined the multi-state investigation against the troubled crypto lender.
“The Department believes Celsius has been engaged in an unregistered securities offering by offering cryptocurrency interest accounts to retail investors. Celsius also lacks a money transmitter license. The Department has joined a multistate investigation of Celsius arising from the above concerns.”
Vermont became the sixth state in America to open an investigation into Celsisus’s crypto interest rate accounts. As Cointelegraph reported earlier, Alabama, Kentucky, New Jersey, Texas and Washington opened investigations into the troubled crypto lender after it paused all withdrawals, swaps and transfers between accounts on June 13, just a day after its chief executive officer Alex Mashinsky claimed all is well with the firm.
Related: Risky business: Celsius crisis and the hated accredited investor laws
Celsius became one of the key crypto lenders in the industry during the bull market, managing billions in customers’ funds and churning out high interet rates for account holders. While regulators and analysts did warn about risks associated with such high lending products, crypto lenders continued to play it down claiming it was a ploy of greedy bankers.
A recent report in Financial Times highlighted that Celsius aggressively bet with client…
Click Here to Read the Full Original Article at Cointelegraph.com News…
