Crypto lending platform Celsius Network has reportedly misled investors about their financial condition.
According to the Vermont Department of Financial Regulation (DFR), the company used the CEL token to strengthen its balance sheet, and funds from new customers to pay off obligations to existing ones.
Per the DFR filing in the bankruptcy court:
“This indicates a high level of violations, and also that, at least at some points in time, existing investors were paid a return on the assets of new clients.”
According to the regulator, Celsius “through its CEO Alex Mashinsky and otherwise” made false and misleading statements about the company’s financial health, profitability, compliance with securities laws and ability to meet obligations to investors.