Vermont joins multistate investigation into Celsius Vermont joins multistate investigation into Celsius
State authorities in Texas, Alabama, and Vermont are investigating the operations of crypto lending firms like Celsius over offering unregistered securities.
2 min read
Updated: Jul. 13, 2022 at 7:03 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Vermont has opened investigations into Celsius Network while warning residents to be wary of investing in more CEL tokens.
Vermont’s Department of Financial Regulation (DFR) said Celsius is “deeply insolvent” and accused it of mismanaging its customers’ funds.
“Celsius is deeply insolvent and lacks the assets and liquidity to honor its obligations to account holders and other creditors.”
According to the statement, the financial regulator believes Celsius engaged in “offering unregistered securities” and lacked a “money transmitter license.” This means the firm had operated in the state without any regulatory oversight.
The financial regulator revealed that it had joined a multistate investigation of Celsius.
Other US states are investigating Voyager and Celsius
Bloomberg reported that regulators in Texas and Alabama are investigating the operations of Celsius and Voyager Digital.
According to Bloomberg, the state authorities are looking into the two firms’ operations to see if they met disclosure requirements and whether their product offerings qualify as securities.
Joe Rotunda, the director of enforcement at the Texas State Securities Board, said:
“What we’re seeing now is that a lot of these crypto-lending firms may not have fully disclosed what they were doing on the backside with investors’ money.”
The chief deputy director at the Alabama Securities Commission, Amanda Senn, also backed this up, saying:
“We are investigating these companies and trying to figure out what happened and why. We are making inquiries. It’s still the initial stages, but we have a responsibility on behalf of our investors in our states.”
Celsius showed the first signs of trouble after it laid off some staff and froze customers’ withdrawals. Since then, other crypto firms like Voyager, CoinFlex, and others have frozen withdrawals.
Meanwhile, Voyager has filed for Chapter 11 bankruptcy. It revealed that it has almost $1.3 billion in outstanding debts owed by Alameda Research and Three Arrows Capital.
Celsius is repaying its debts
Celsius has paid some of its debts to DeFi protocols. It recently paid off its debts to Aave and got back $410 million in staked Ethereum collateral. It still owes Aave about $8.5 million.
This is similar to the move it made last week when it paid off all its $228 million debts to Maker Protocol and freed up $440 million worth of wrapped Bitcoin (wBTC) pledged as collateral.
But it still owes Compound about $50 million in USDC and has $227 million worth of collateral locked in Aave and Compound.
Mentioned in this article
Celsius 
Wrapped Bitcoin 
Maker 
Aave 
Compound 
Celsius Network 
Voyager 
Three Arrows Capital 
Alameda Research 
MakerDAO Author 
Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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In this article
Celsius Network is a P2P decentralized lending & borrowing platform.
Wrapped Bitcoin
$66,036.62
Wrapped Bitcoin delivers the power of Bitcoin with the flexibility of an ERC20 token.
Maker
$1,574.09
Maker is a decentralized autonomous organization on the Ethereum blockchain seeking to minimize the price volatility of its own stable token — the Dai — against the IMF’s international currency basket SDR.
Aave
$165.745
Aave is an open source and non-custodial protocol enabling the creation of money markets.
Compound
$54.2332
Compound (COMP) is an ERC-20 asset that powers the community governance of the Compound protocol; COMP token-holders and their delegates debate, propose, and vote on changes to the protocol.
Celsius Network
Celsius Network is a bankrupt cryptocurrency lending company that was founded in 2017 and headquartered in Hoboken, New Jersey.
Voyager
Voyager Digital is a bankrupt cryptocurrency exchange company in the United States that was founded in 2018.
Three Arrows Capital
Three Arrows Capital (3AC), a Singapore-based crypto hedge fund, collapsed due to poor risk management, recklessness in dealing with business partners and a significant portion of greed.
Alameda Research
Alameda Research was once a principal trading firm, operating as an arm of the failed crypto exchange, FTX.
Maker is a Decentralized Autonomous Organization that creates and insures the dai stablecoin on the Ethereum blockchain.