Celsius Bankruptcy: Regulator States How Celsius Manipulated CEL Token Price
Bankruptcy ridden crypto lending company Celsius has landed into another big trouble over running alleged Ponzi schemes. The recent filing reveals that over forty US state regulators are now getting into Celsius bankruptcy details, operations and financial history.
Celsius bankruptcy result of Ponzi scheme?
According to Financial Times, the Vermont Department of Financial Regulation in a court filing has alleged that Celsius was running a Ponzi scheme. US Trustee’s Office asked the judge to appoint an independent examiner to oversee Celsius bankruptcy. The state regulator went on to write in support of the filed motion.
The Trustee Office wanted to launch an independent investigation over the significant transparency issues. However, Vermont’s new claims hint at a big debacle.
It mentioned that Celsius was running with too few funds even before crypto winter. Management was hiding its huge losses, asset deficit, and decaying financial state from its investors. It also alleged that the crypto lender never registered much revenue to support its promised yields.
This manifests the height of financial mismanagement by Celcius. However, this finding also depicts that at one point the crypto lender paid existing investors yield with the funds/assets of the new customers. This is one of the reasons which lead to Celsius bankruptcy.
Why CEL token prices spiked?
However, the state regulator also alleged that the crypto lender was using its native token CEL as a balance sheet ballast. Celsius and its team involved in the price manipulation of the CEL token. Investors’ funds were used to buy Celsius tokens in order to increase its net position.
Celsius increased its net position by hundreds of million dollars. Cel token price increase was artificially inflate by the inflating company’s holdings. This same is reflected in its own balance sheet and financial statements.
Celsius Bankruptcy was one of the biggest jolts that shocked the global crypto market. However, the company went on to file for Chapter 11 bankruptcy on July 13 after trying to return loans.
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