Celsius Insolvent Since 2019, Regulator Suggests

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  • The Vermont financial watchdog has released a report indicating that Celsius may have been insolvent since 2019
  • This is against the company’s earlier stand that its fall was caused by the 2022 crypto winter
  • It also dwarfs Chris Ferraro’s admission that Celsius’ finances started going south in 2020

The Vermont Financial Regulator has claimed that Celsius’ financial troubles date back to 2019 and not 2020 or 2022 as indicated by the company’s management. In a document tabled in court, the financial watchdog points out that the crypto company also operated against securities laws. The Vermont regulator added that Celsius’ debts exceed assets if the company’s stake in the CEL, Celsius’ native token, is removed from the equation.

Celsius CFO Holds that Troubles Started in 2020

Apart from ignoring set securities regulations, the crypto lender is also alleged to have given false information on the security of user funds and its muscle to fulfil its return on investment promises. Celsius’ CFO, Chris Ferraro, told the court that his company started going under in 2020, which exposes the company’s earlier stand that its financial troubles started in 2022.

Ferraro further suggested that the company may have “at some point in time” been operating a Ponzi scheme by paying returns to existing investors using funds from new investors. This was caused by low profits while Celsius promised a high ROI.

Without CEL, Liabilities Exceed Assets

The regulator also alleges that Celsius bought CEL worth millions of USD, which, according to the Celsius CFO, caused a massive hole in its books when the token’s price plummeted. The Vermont financial watchdog argues that excluding the company’s stake in CEL would result in Celsius’ liabilities exceeding assets.

Despite knowing its financial troubles, the company allegedly kept on misleading users. The regulator attached screenshots of Celsius’ founder and CEO Alex Mashinsky’s Twitter posts assuring Celsius users that “all funds are safe,” and there are no “significant losses” suffered due to extreme market volatility in 2022.