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Vermont regulators have accused struggling crypto lending firm Celsius of misleading investors. The regulators opined that the financial struggles of the lending firm could be traced back before 2020.
This submission is further backed by the testimony of Celsius’s financial officer, Chris Ferraro. While giving his testimony, the financial officer disclosed that the company’s struggles started as early as 2020. Before the revelation, there were misunderstandings about how Celsius plunged into its current crisis.
There were misconceptions that the prevailing bear market pushed Celsius into its current woes. The firm and its directors, including the CEO Alex Mashinsky, didn’t help either. Instead, they kept the sources of the crisis away from investors and the general public. They kept projecting the Celsius financial status in a positive light.
Similarly, Alex Mashinsky announced last year that Celsius recorded a massive profit despite the firm struggling with some losses. Also, the crisis struck Celsius severely because it could not gather much revenue to cover the high investment return of customers. Another fault on the firm’s part was its fascinating promises to give investors a lucrative return on their deposit.
Celsius couldn’t keep up with its promises when the crisis began to hit hard. Therefore, compelling the firm to pay interest on investors’ funds with the new influx of investment from new customers. All these factors contributed heavily to the struggles of Celsius years back before it fully manifested this year.
Side notes about the Celsius crisis
Around July 2022, Celsius had a deficit of $1.2 billion on its balance sheet. The firm’s CEO, Alex Mashinsky, attested to it during Celsius’s filing for bankruptcy. Before that, on June 12, the firm halted withdrawals from its platform, denying investors from having access to their funds.
The suspension of withdrawal ushered in the struggles of Celsius. The firm is gradually recovering by allowing investors to withdraw some of their funds. However, the situation has placed regulators on a high alert against the crypto space. Regulators will now work on how to best regulate the industry against future occurrences.
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