The Vermont Department of Financial Regulation (DFR) says Celsius CEO, Alex Mashinsky, is lying when he's talking about the safety of customer funds.
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In an official statement, the regulator added that other representations made by Celsius representatives about the firm's ability to meet withdrawal obligations are also untrue. The DFR noted that Celsius is "deeply insolvent and lacks the assets and liquidity to honor its obligations to account holders and other creditors."
"Celsius deployed customer assets in a variety of risky and illiquid investments, trading, and lending activities."
The watchdog also said that it is "highly unlikely" there are any benefits for clients to keep their assets on Celsius on the so-called "HODL mode" after the firm has frozen investor accounts:
"It is also highly unlikely that placing accounts into “HODL mode” will have any effect on the value of cryptocurrency assets held in such accounts or the value of Celsius assets and investments. The freezing of the accounts does not prevent further declines in value."
The DFR has called on investors to avoid purchases of CEL tokens as there's still a riks that those tokens "will sharply decrease in value, or even become worthless, in the future."
The statement comes shortly after reports said Celsius hired a new law firm that will advise it on how to restructure the company's business amid troubles related to outstanding debts.
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