Department of Financial Regulation States Celsius Is Insolvent
The Department of Financial Regulation issued a consumer alert against Celsius, stating that it is deeply insolvent. DFR mentioned in its release that the crypto lender Celsius Network’s actions are affecting thousands of customers.
The DFR also stressed that the lender lacks the resources and liquidity to fulfill its commitments to account holders and other creditors.
Beginning in June, Celsius stopped withdrawals, made employment cuts, and recruited restructuring consultants to offer advice on its financial predicament.
The lender said earlier on Tuesday that it had fully repaid its debt on the decentralized finance (DeFi) network. As a result, $26 million in collateral was released as a part of its restructuring strategy. It also sent $418 million in “stETH,” or staked ether, to an anonymous wallet.
Since Celsius allegedly lacks a money transmitter license, according to DFR, its prior operations were mostly uncontrolled.
Additionally, the institution failed to declare its interest accounts as securities, which kept depositors and other creditors in the dark about potential dangers.
The troubled crypto lending platform offered an attractive 17% interest on deposits, luring several investors to invest their money into Celsius. One fine day, the platform halted its withdrawals and all activities. The customers have been blocked from accessing their funds for over 31 days now.
The Department of Financial Regulation has launched a multistate investigation into Celsius. The crypto bear market is proving to be difficult for many as several crypto firms are in a troubling position.