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New Court Filing Claims Celsius Network May Have Operated As A Ponzi Scheme

In a not-too-surprising turn of events. Celsius Network and its team find themselves in an even bigger pickle. The Vermont Department of Financial Regulation claims the bankrupt crypto lender purposefully misled investors. Moreover, the company violated security law compliance and lied about its financial health. 

Celsius Network Deceived Investors

There have always been concerns over Celsius Network and the weeks leading to is bankruptcy claims. Many users felt as if the company was making things appear more rosy than they were in reality. The Vermont Department of Financial Regulation seems to agree with that assessment. Their recent court filing claims Celsius Network misled investors, did not comply with securities laws and was financially unhealthy for some time.

More specifically, the Vermont watchdog states how Celsius suffered “significant losses” in H1 2021 yet did not share that information with investors. A clear violation, as the law forces companies to disclose financial statements to their clients. Moreover, claims by Celsius CEO Alex Mashinsky – notoriously claiming all funds are safe – are bogus, as the company was insolvent then.  

Interestingly, the Vermont entity also has documents confirming Celsius never earned enough revenue to sustain its promised yield payments. A creditor meeting was held to confirm that fact, yet the company continued lying to investors. Essentially, it was a bubble waiting to burst, and when it did, things went from bad to worse very quickly. Gross mismanagement and purposefully misleading investors is not a sustainable business model. 

Unfortunately, that makes Celsius Network look like a modern Ponzi Scheme. The Vermont Department of Financial Regulation states existing investors were likely paid with assets of new investors. The potential evidence of manipulating the CEL token price to inflate the company’s balance sheet is making things worse. Things do not look good for the company and its team, and it remains unclear if affected investors get their money back. 

JP Buntinx
JP Buntinx
JP Buntinx is passionate about cryptocurrencies, fintech, blockchain, and finance. He currently resides in Belgium.
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