The filing was submitted in support of the United States Trustee’s motion to appoint an independent examiner amid the fallout from the crypto firm’s collapse.
The Vermont watchdog says that Celsius kept its “massive losses” in the first half of last year from investors, despite laws requiring it to disclose financial statements.
The filing cites blogs and tweets from Celsius CEO Alex Mashinsky, including one insisting that “all funds are safe” when in fact, says the filing, “the company was insolvent and depositor funds were not safe”.
The document also notes a recent creditor meeting in which the company admitted it had never earned enough revenue to support the yields being paid to investors.
“This shows a high level of financial mismanagement and also suggests that at least at some points in time, yields to existing investors were probably being paid with the assets of new investors,” says the filing.
In addition, the regulator alleges that Celsius may have manipulated the price of its CEL token to “artificially” inflate holdings on its balance sheet.
The Vermont watchdog says that it and other state regulators are “especially concerned” about losses suffered by retail investors.
“The appointment of an Examiner is critical to ensure the interests of these investors are protected.”,Bankrupt crypto lender Celsius Network made “false and misleading claims” about its “financial health and compliance with securities laws”, according to a court filing from the Vermont Department of Financial Regulation.,
