Crypto Regulator Explains How Celsius Manipulated Price of CEL Token

Another major issue with running alleged Ponzi schemes has plagued the bankrupt cryptocurrency loan business Celsius.

According to the most recent filing, more than 40 US state agencies are currently investigating Celsius' activities, finances, and bankruptcy history.

Ponzi scheme causes Celsius to go bankrupt?

Financial Times reports that Celsius was accused of operating a Ponzi scheme by the Vermont Department of Financial Regulation. The US Trustee's Office requested that the judge appoint an impartial examiner to supervise the bankruptcy of Celsius. The state regulator continued to write in favour of the motion that was submitted.

The Trustee Office desired to begin an impartial investigation into the serious transparency problems. But Vermont's latest allegations suggest a major fiasco.

Even before the crypto winter, it claimed that Celsius was operating with insufficient funding. The management kept its investors in the dark about its substantial losses, asset shortfall, and deteriorating financial situation. Additionally, it claimed that the cryptocurrency lender never recorded enough revenue to back up its guaranteed yields.

This demonstrates Celcius's extreme financial mismanagement. This discovery also shows that the cryptocurrency lender once paid existing investors' yield with the money/assets of the new clients. This is one of the factors that caused Celsius to go bankrupt.

Why did CEL token prices increase?

The state regulator, however, additionally claimed that the cryptocurrency lender was utilising its own native coin, CEL, as a balance sheet weight. The CEL token's price is being manipulated by Celsius and its crew. To boost its net position, investors' money was utilised to purchase Celsius tokens.

The net position of Celsius increased by hundreds of millions of dollars. The inflated company's holdings artificially inflated the price of cel tokens. Its own balance sheet and financial statements also show the same.

One of the largest shockwaves to hit the global cryptocurrency industry was the bankruptcy of Celsius. However, despite attempting to repay loans, the company ultimately filed for Chapter 11 bankruptcy on July 13.