Aaryamann Shrivastava
FXStreet
- The Vermont Department of Financial Regulation stated that Celsius was under investigation by 40 state securities regulators.
- Celsius filed for bankruptcy back in July this year, with a shortfall of $1.2 billion revealed in the filing.
- Earlier this week, co-founder Daniel Leon also filed for "worthlessness" in regards to 32,600 shares of stock owned by him.
Celsius made ripples in the crypto market earlier this year when it filed for bankruptcy, citing "extreme market conditions" arising from the bearishness and constant crashes. With over $4.5 billion in liabilities, Celsius has been working with the authorities to repay its customers.
Vermont goes after Celsius
The Vermont Department of Financial Regulation (VDFR) filed with the US Bankruptcy Court on September 7 with multiple allegations against Celsius.
The court document states that Celsius has been under the investigation of about 40 state securities regulators looking into potential unregistered securities activity, mismanagement, securities fraud, and market manipulation by Celsius.
VDFR claimed that Celsius had been making false and misleading claims to its investors, creating the appearance of a financially stable and healthy company.
Citing this tweet as evidence of the same, VDFR stated that the company was experiencing unrealized losses of approximately $450 million between May 2 and May 12, 2022.
This makes it evident that the investors' funds were not safe.Problems for Celsius began soon after it filed for Chapter 11 bankruptcy in July as the filing revealed a hole of $1.2 billion in the balance sheet.
Although Celsius has still been making efforts to repay all its investors, a filing from September 2 observed the request for reopening withdrawals for only certain Custody and Withhold accounts.
Notwithstanding the extreme market volatility, Celsius has not experienced any significant losses and all funds are safe.
— Alex Mashinsky (@Mashinsky) May 11, 2022
Celsius co-founder files for "worthlessness”
On the other hand, one of the co-founders of Celsius, Daniel Leon, filed a declaration of worthlessness. The filing concerned the 32,600 shares of Celsius Network Inc. stock held by Leon.
Per the filing, Celsius stocks can now be considered worthless, and as per Simon Dixon, CEO of BnkToTheFuture, Leon intends on using them as a tax write-off.
Celsius' next hearing is scheduled for September 14, post which details of repayment may emerge.
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