Celsius Network has been accused by US regulators of misleading investors.
Vermont regulators believe Celsius Network has misled investors regarding its financial position, The Wall Street Journal reported.
Celsius Network Misled Investors
Celsius CFO Chris Ferraro said in a statement that the company’s losses were up to 2020. The market correction accelerated the decline of the crypto lending platform and caused the company to declare bankruptcy.
However, other executives of the company, including Celsius CEO Alex Mashinsky, continued to make optimistic statements about the financial situation. Mashinsky had claimed Celsius was in the snow at a time when the firm was experiencing huge losses.
Celsius couldn’t generate enough revenue to cover the high rates, so it had to use investor funds to pay the interest.
In the news of The Wall Street Journal, it was emphasized that this could be a potential securities fraud.
Celsius Network, as it will be remembered, filed for bankruptcy in mid-July.
Mashinsky stated that there is a $1.2 billion gap in the company’s balance sheet.
Celsius asked the court in early September to continue withdrawals from some users. The company stated that this is only the first step.
Celsius announced that it suspended withdrawals on June 12 due to the liquidity crisis.
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