Crypto Lender Celsius is “deeply insolvent”, said U.S. State Regulator

On Tuesday, Vermont’s Department of Financial Regulation (DFR) said cryptocurrency lender Celsius Network is “deeply insolvent” and does not have the assets and liquidity to fulfill its commitments to its customers and other creditors.

According to a statement, the crypto lender has been involved in an unregistered securities offering, selling cryptocurrency interest accounts to retail investors including investors in Vermont. 

Until recently, Celsius was operating unregulated and did not have a money transmitter license.

“Due to its failure to register its interest accounts as securities, Celsius customers did not receive critical disclosures about its financial condition, investing activities, risk factors, and ability to repay its obligations to depositors and other creditors,” the regulator said.

The state agency has now joined a multistate investigation of Celsius.

Celsius’s decision to suspend customer redemptions is now under investigation by the state securities regulators in Alabama, Kentucky, New Jersey, Texas and Washington.

Celsius froze withdrawals and transfers, citing “extreme” market conditions, leaving its 1.7 million of its customers unable to redeem their assets last month.

The retail crypto lending platform said it was exploring options including deals and debt reconstruction.