Things are going from bad to worse for bankrupt cryptocurrency lender Celsius Network. New filings from the Vermont Department of Financial Regulation say Celsius was insolvent as early as 2019.
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In its 341 bankruptcy meeting, where creditors question debtors under oath, Celsius admitted that the company never earned enough revenue to support the yields paid to investors.
Vermont regulators say this suggests Celsius probably paid yields to existing investors with assets of new investors. Regulators didn’t use the term, but that fits the definition of a Ponzi scheme.
The news comes a week after Hoboken, N.J.-based Celsius Network asked to return digital assets to some users. The company requested court permission to release cryptocurrencies in its custody program and withholding accounts, which are for storage rather than generating returns. Roughly $210 million in assets are currently in its custody program accounts and $15 million in withholding accounts, according to reports. Celsius says customers own those cryptocurrencies, not the company. The court scheduled a hearing on the request for Oct. 6. Still, it’s only a fraction of the $4.7 billion owed to users according to filings from mid-July.
Celsius Feels The Heat
Celsius Network had 1.7 million users and $11.8 billion in digital assets under management in May. And its staking services provided users attractive offers of up to 18% returns on their crypto holdings by lending them out. However, Celsius lent…
