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Vermont regulators go after Celsius.
In a statement on Tuesday, Vermont’s Department of Financial Regulation reveals that it is joining investigations against Celsius as it believes the crypto lender breached securities law and operated without licensing.
“The Department believes Celsius has been engaged in an unregistered securities offering by offering cryptocurrency interest accounts to retail investors,” the statement from the financial regulators read, explaining its motivations. “Celsius also lacks a money transmitter license. This means that until recently, Celsius was operating largely without regulatory oversight.”
According to the regulators, this lack of licensing allowed Celsius to operate without offering full disclosure about its financial condition or how it was able to offer its promised returns.
Furthermore, the department expressed its belief that Celsius is “deeply insolvent and lacks the assets and liquidity to honor its obligations to account holders and other creditors.”
Consequently, the department warned against account holders agreeing to requests from Celsius to put their account in “HODL mode” as a show of customer confidence, saying there is no logic to it as the platform has already halted withdrawals and it accrues no benefit to customers.
Additionally, it warned users against participating in efforts to accumulate the protocol’s native token CEL to drive the price up, liquidating sellers, noting that such price manipulation could breach state and federal laws, and the price of the token could still become worthless.
Celsius account holders have been advised to seek legal counsel on how their holdings may be affected in the event of a bankruptcy filing or lay complaints with the department where necessary. As reported by The Crypto Basic, asset holders with bankrupt Voyager, another crypto lender, may not receive full repayment.
Celsius, a crypto lender with billions of dollars in assets under management, halted withdrawals on June 12, citing unfavorable market conditions. Notably, on June 16, securities regulators in Alabama, Kentucky, New Jersey, Texas, and Washington revealed they were launching an investigation into the matter.
It is worth noting that the firm has so far refused to file for bankruptcy and attempted to settle debts owed to crypto protocols. However, as reported by The Crypto Basic on Monday, Celsius has hired new lawyers, which could lead to a possible change in its approach to insolvency woes.