Did Celsius Network Manipulate CEL Token? Here’s What Bankruptcy Regulator Has To Say
The post Did Celsius Network Manipulate CEL Token? Here’s What Bankruptcy Regulator Has To Say appeared first on Coinpedia – Fintech & Cryptocurreny News Media| Crypto Guide
Crypto lender Celsius continues to take unexpected turns now. After accusing the former manager of stealing millions of dollars, the bankrupt lender has now faced big trouble. The Vermont Department of Financial Regulation accused Celsius of running an alleged Ponzi scheme in a court filing.
The latest news from the firm is that Celsius network has misguided its investors about financial difficulty as the crypto lender used its native CEL token to strengthen its balance sheet and illegally used the funds of new investors to repay its old investors.
On Wednesday, Vermont’s financial regulator filed with the U.S. Bankruptcy Court in the Southern District of New York that Celsius and Mashinsky “made false and misleading claims to investors†that allegedly reduced the risks of market volatility and tempted investors to invest more in the platform. According to the court filing, over forty U.S. state regulators are now all set to investigate Celsius’s bankruptcy details, transaction history, and operations.
Vermont’s financial regulator claimed that Celsius was running with low funds even before the bear market. The firm was hiding its huge losses, dying financial condition, and asset deficit from its investors to keep them glued to their investment goals on the platform.
Vermont also mentioned that the crypto lender never made the required revenue to provide its promised yields to the investors. The state regulators and U.S. Trustee’s Office requested the court investigate Celsius’s bankruptcy by appointing an independent examiner.
For example, according to Vermont’s filing, Celsius CEO Alex Mashinsky informed investors that “all funds are safe†on 11 May, but the fact was Celsius was running on a loss of approximately $454 million between 2 May and 12 May.
Strategy Behind Manipulating CEL Tokens
Celsius did not want to lose their investors and platform’s dominance in the crypto market. Vermont’s financial regulator presented solid evidence and claimed that Celsius used its native CEL tokens to manipulate investors and its price by using new investors’ funds to buy extra tokens and offering many of them to old investors in the form of promised interest.
Celsius purchased CEL tokens to use it as a balance sheet stabilizer. Celsius manipulated the CEL token’s price by boosting its Net Position by spending hundreds of millions of dollars of investors’ funds and inflating the company’s CEL holdings on its financial statement and balance sheet.
The price-fixing of CEL tokens led regulators to launch an investigation against Celsius. Celsius’s bankruptcy shook the entire crypto community as it failed to gain investors’ trust.
