Vermont State Regulator Says Celsius CEO Made ‘False and Misleading’ Claims to Investors on Social Media
Vermont’s financial regulator is accusing the CEO of embattled crypto brokerage Celsius Network of making false and misleading claims regarding the company’s financial health and compliance with securities laws on social media.
In a new filing with the United States Bankruptcy Court in the Southern District of New York, the Vermont Department of Financial Regulation (DFR) enumerates the instances when Celsius CEO Alex Mashinsky made spurious claims.
The regulator says that Mashinsky posted on Twitter that Celsius is capable of meeting obligations and safeguarding customer funds at a time when the company lacked the needed assets to repay its dues to depositors and other creditors.
Mashinsky also claimed that the company is profitable and financially healthy despite suffering massive losses in 2021 and failing to earn the needed revenue to support returns to investors.
The DFR says that the misleading claims likely helped induce retail investors to entrust their investments with Celsius.
“During the course of the multistate investigation, it has become clear that Celsius, through its CEO Alex Mashinsky and otherwise, made false and misleading claims to investors about, inter alia, the company’s financial health and its compliance with securities laws, both of which likely induced retail investors to invest in Celsius or to leave their investments in Celsius despite concerns about the volatility of the cryptocurrency market.”
Celsius filed for Chapter 11 bankruptcy in July as the digital assets industry suffers massive losses because of the crypto winter. A group of custody wallet customers is suing the firm to get back $22.5 million worth of funds.
The troubled lender is also suing its former business partner KeyFi and the investment firm’s CEO, Jason Stone, claiming that it suffered significant financial losses because of their mismanagement and theft of Celsius coins.
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