Filing: Vermont says Celsius CEO Alex Mashinsky repeatedly misled investors about the lender's finances and used its own CEL token to bolster its balance sheet
The crypto lender admitted in a recent creditor call that it could not earn enough revenue to support its yields, the Vermont Department of Financial Regulation said. Tweets: @davidzmorris , @ldrogen , @thestalwart , @davidbelle_ , @plainsite , @martinkrung , @hedgeye , @bitfinexed , @bennetttomlin , @smtuffy , @smtuffy , @bennetttomlin , @kadhim , @kadhim , @kadhim , @silvermanjacob , @silvermanjacob , @bennetttomlin , and @bennetttomlin Tweets: David Z. Morris / @davidzmorris : This #CelsiusNetwork filing is absolutely bonkers. Analysis incoming, but the long and short: state investigators believe it was a Ponzi scheme as early as 2020. https://cases.stretto.com/... Leigh Drogen / @ldrogen : Directly to jail, do not pass go, do not collect $200 https://twitter.com/... Joe Weisenthal / @thestalwart : State AGs getting in on the action https://twitter.com/... David Belle / @davidbelle_ : you're going pen @Mashinsky https://twitter.com/... @plainsite : A perfect example of how completely broken the state-based money transmission regulatory system is. 40 investigators, zero proactive steps prior to failure and customer losses. https://twitter.com/... @martinkrung : And during decline the team sold their (private) CEL token to their own company! https://twitter.com/... https://twitter.com/... @hedgeye : https://twitter.com/... https://twitter.com/... @bitfinexed : I thought it was a Ponzi scam in 2019. https://twitter.com/... Bennett Tomlin / @bennetttomlin : Do y'all know how hard it is to get 40 US States working on the same thing? https://t.co/3fdvBvB4Cu Sean Tuffy / @smtuffy : Never tweet https://twitter.com/... Sean Tuffy / @smtuffy : Oh https://cases.stretto.com/... https://twitter.com/... Bennett Tomlin / @bennetttomlin : Excluding Celsius token, LIABILITIES EXCEEDED ASSETS IN FEBRUARY 2019 FOR CELSIUS https://twitter.com/... @kadhim : The filing includes balance sheet information for May, based on financials Celsius provided to state regulators: https://cases.stretto.com/... Vermont says they show “liabilities substantially exceeding assets, whether including or excluding the [CEL holdings]” https://twitter.com/... @kadhim : This is a pretty damning court filing from Vermont's Department of Financial Regulation about bankrupt crypto lender Celsius Network. Alleges that without Celsius's holdings of its own native CEL token, it has been insolvent since at least February 2019 https://cases.stretto.com/... @kadhim : Other claims include: - Celsius was deeply insolvent when it told customers on June 7 it could meet all its obligations; - In May/June, Celsius was buying its own CEL token with customer assets, “artificially inflating” its own balance sheet and also possibly enriching insiders @silvermanjacob : Celsius was insolvent as early as 2020. It “never earned enough revenue to support the yields being paid to investors” — ie it was a Ponzi from the beginning. https://twitter.com/... @silvermanjacob : Mashinsky repeatedly lied about the health of Celsius. On May 11, he said everything was fine when the company was insolvent after having lost $454m in 10 days. https://twitter.com/... Bennett Tomlin / @bennetttomlin : “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” https://twitter.com/... Bennett Tomlin / @bennetttomlin : Okay this is absolutely wild. There were 40 state regulators investigating them https://twitter.com/... https://twitter.com/...
Context & Ripple Effects
The Vermont Department of Financial Regulation's filing is the first state-level accounting of what Celsius insiders had already described: the lender's own compliance unit had warned of misrepresentation of financial information months before the bankruptcy, and a former investment manager had sued Celsius for running what it called a Ponzi scheme built on customer deposits and token price manipulation.
The new allegations sharpen the picture: Vermont says Celsius admitted on a creditor call it could not earn enough revenue to support its yields, and that excluding its CEL holdings the company was insolvent as early as February 2019 — meaning the token was doing balance-sheet work the business could not. The examiner's later findings and the CFTC's conclusions would corroborate this trajectory, but this filing dates the insolvency claim years earlier.
First-order effects
- Alex Mashinsky and Celsius face a regulator's formal record that they repeatedly misled investors about solvency and used customer assets to buy CEL to prop up their own balance sheet — a factual foundation other states and federal agencies can build on.
- Celsius's own admission that yields could not be covered by revenue converts the bankruptcy from a liquidity story into a solvency story, strengthening creditors' claims that withdrawals were paid with new customer funds.
Second-order effects
- The filing gives the CFTC's parallel investigation — which reportedly concluded Celsius misled investors and Mashinsky broke US rules — a state-level evidentiary base, raising pressure for coordinated federal charges rather than piecemeal state actions.
- Every crypto lender still marketing yield products now has to answer the CEL question: how much of the balance sheet is its own token, and what happens to solvency when that asset is excluded.
Third-order effects
- If regulators treat self-referential token holdings as illusory capital, the yield-lender model built on native-token accounting becomes structurally unfinanceable, pushing the sector toward either full reserve disclosure or exit from US markets.
- The pattern — internal compliance warnings, private fraud suits, then state and federal findings converging on the same misconduct — points toward routine multi-agency scrutiny of crypto lenders as a class rather than one-off enforcement.
The trend: Crypto lenders are moving from self-reported balance sheets to regulator-audited ones, with native tokens losing their status as countable capital.