DFR is set to investigate the crypto lending platform, Celsius.
As per DFR, Celsius is an ‘unregistered security’, it operated outside the law.
The U.S based Vermont Department of Financial Regulation (DFR), has a recent update on the crypto firm, Celsius Network.
According to a statement issued on Tuesday, DFR is set to carry out a multistate investigation on Celsius.
The regulatory body expressed that the Celsius Network is in an insolvent condition and lacks the assets and liquidity to pay back its creditors. As per DFR, Celsius is an unregistered securities offering.
DFR states:
Celsius deployed customer assets in a variety of risky and illiquid investments, trading, and lending activities. Celsius compounded these risks by using customer assets as collateral for additional borrowing to pursue leveraged investment strategies.
Trouble Continues for Celsius
The DFR added that some of the assets that Celsius holds are illiquid, which means that selling them could be challenging and may create a financial loss. Also, the company’s investments and assets are probably not enough to pay off its obligations. Following this, the DFR will investigate the lending firm. At the same time, Celsius has not yet reacted to their investigation process.
The major crypto firm, Celsius Network, has been going through an extreme crash due to the global crypto market fall. Recently, the firm suspended all the withdrawals, swaps, and transfers with their customers, saying that their clients would continue to earn interest during the freeze.
Recently, Celsius laid off its 150 employees amid the current situation, as per reports. However, apart from Celsius, more crypto based companies are facing financial issues in the liquidity crisis in the crypto world, such as Three Arrows Capital (3AC).