For several months before its eventual collapse, Celsius Network was deeply insolvent and masked its losses behind a Ponzi scheme-like business model, the Vermont securities watchdog has alleged.
In its filing with the New York Bankruptcy Court, the Vermont Department of Financial Regulation wrote in support of a request by the Trustee Office to appoint an independent examiner in its probe into Celsius, the collapsed lender that filed for bankruptcy in mid-July. As CoinGeek reported last month, trustee William Harrington requested that the examiner looks into “credible allegations of incompetence and gross mismanagement” at Celsius.
In its filing, Vermont noted that at least 40 state regulators in the United States are going after the lender for securities fraud, market manipulation, mismanagement, and more.
“At a minimum, Celsius has been operating its business in violation of state securities laws. That improper practice alone warrants investigation by a neutral party.”
However, it goes beyond regulatory actions. The Vermont watchdog believes that Alex Mashinsky, the Chief Executive Officer who is believed to have played the biggest role in the lender’s collapse, lied to investors regularly about their funds and the company’s financial health. In essence, he was running a Ponzi scheme for two years before Celsius imploded, the agency boldly claims.
“Celsius also admitted at the 341 meetings that the company had never earned enough revenue to…
