Celsius Network Hampered by One-Two Punch of Harsh Accusations

Through bankruptcy, Celsius Network (CEL-USD) is stumbling along. It has been engaged in a protracted legal battle with creditors, clients, and lenders as it attempts to climb out of a financial hole. Now, Celsius is taking a few more hits this week. Authorities have charged Celsius of operating like a Ponzi scheme. One of CEL's cofounders is now making a statement that will make the bankruptcy process much more challenging.

In June, when withdrawals were frozen, Celsius became notorious in the cryptocurrency world. One of the first companies to forbid investors from transferring their money, the firm essentially forced them into a negative spiral that most investors just wanted to escape by accepting losses while they could. The choice was justified at the time as a measure to safeguard investors' investments. But when it became apparent that Celsius was on the verge of bankruptcy, the action was more of a stabilizing effort.

After some wrangling with lenders and a determined effort to pay off debt, time passes, and Celsius is still declaring Chapter 11 bankruptcy. The corporation has been pledging since July to return to a profitable position where it can draw in new investors. But it turns out that's easier said than done.

The company's strategy to mining its way out of debt has been challenged after many weeks of legal battles between Celsius and its creditors. Finally, Celsius has received a judge's approval to proceed in this manner. However, the business has also had to cope with several lawsuits, serious allegations of financial misuse, and more. Now, its problems are just getting worse.

The Celsius Network navigates Regulators' Complaints

This already struggling corporation is now being attacked by new, audacious allegations. The newest challenges for The Celsius Network? Regulators are closely monitoring the circumstances that resulted in its bankruptcy proceedings. The legal dispute between the corporation and CEL has also recently been complicated by the cofounder of CEL.

First off, it's clear that Celsius and Vermont's Department of Financial Regulation are at odds; the agency recently made this information public in a striking new file. State officials basically claim that Celsius "misled investors about its financial soundness." They claim the business padded its financial sheet with the CEL cryptocurrency.

The department even goes so far as to claim that Celsius is run like a Ponzi scheme. The petition states that "yields to current investors were undoubtedly being paid using the assets of new investors, at least at certain periods in time." The case, according to the agency, is the outcome of a multi-state probe of the business's actions before it filed for bankruptcy.

Daniel Leon, a co-founder of Celsius, is raising a whole other issue for this already-tense brand. Leon recently filed a document with the court describing his 32,600 common shares as "worthless." Leon is probably utilizing the filing to transform his ownership into a tax deduction, therefore this information may not have any bearing on Celsius in terms of penalties. However, it just makes the Celsius Network's situation worse.