States’ backlash against Binance.US continues with 6th license pulled

May 1, 2024 Coin Telegraph

US state agency issues alert on crypto fraud happening over social media

July 21, 2023 Coin Telegraph

Vermont issued the investor alert after a 74-year-old man lost his life savings of over $340,000 in a crypto fraud orchestrated over Instagram and Telegram.

The Vermont Department of Financial Regulation (DFR) — the United States state of Vermont’s financial regulatory agency — warned citizens against rising crypto investment frauds perpetrated over popular social media sites.

On June 25, 74-year-old Naum Lantsman lost his life savings of $340,000 to a crypto scam orchestrated over Instagram and Telegram. The DFR referenced the incident as it emphasized “the need for Vermonters to exercise extreme caution and vigilance when using or investing in cryptocurrency.”

*A snippet of Vermont’s investor alert against crypto scams. Source: dfr.vermont.gov*

Instagram has been rated as the top platform connected to crypto fraud by the Federal Trade Commission (FTC), which is also true for Lantsman. His initial contact with the crypto scammer happened over Instagram, wherein he came across a post from SpireBit claiming to be an “international financial broker” dealing in cryptocurrencies.

Without any form of investigation or research about the platform, Lantsman created an account on SpireBit. A Spirebit representative contacted Lantsman over Telegram and, over several days, coerced him into making investments.

What started as a $500 investment ultimately resulted in a more than $340,000 loss. Once a user invests on fake platforms like SpireBit, the dashboard shows profits on every trade, which encourages investors to shell out more of their savings.

Lantsman had heard about crypto scams in the past but never expected himself to become a victim of the crime. Vermont DFR blames the rising crypto scams on the con artists that devise “more complex, personalized tactics” with layers of deception.

From forging bank documents and statements to having friendly conversations, scammers’ ever-evolving techniques can be tackled through vigilance and background checks.

Vermonters have been asked to report fraud in a timely manner to help reduce financial damage and track down criminals.

Eun Young Choi, director of the U.S. Justice Department’s National Cryptocurrency Enforcement Team, said that decentralized finance hacks were a “pretty significant issue,” given the rise of North Korean “state-sponsored hackers.”

Justice Department Announces First Director of National Cryptocurrency Enforcement Teamhttps://t.co/PvJ6iRDQ8P
— Justice Department (@TheJusticeDept) February 17, 2022

Choi also reaffirmed that the Justice Department is after crypto firms that either commit the crime or turn a blind eye to “obscure the trail of transactions.“

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

Magazine: US enforcement agencies are turning up the heat on crypto-related crime

Texas and Vermont State Regulators Object to Celsius Seeking Permission To Sell Stablecoin Holdings

September 30, 2022 The Daily Hodl

More Than a Half Dozen US Securities Regulators File Actions Against Crypto Lender Nexo

September 26, 2022 Bitcoin.com

Vermont’s financial regulator alleges Celsius and its CEO made ‘false and misleading claims’

September 7, 2022 Coin Telegraph

Celsius

According to the regulator, Celsius “lacked sufficient assets to repay its obligations” despite suggesting it had enough funds in its reserves to mitigate the risk of insolvency.

The Vermont Department of Financial Regulation, or DFR, alleged crypto lending platform Celsius Network and CEO Alex Mashinsky misled state regulators about the firm’s financial health and its compliance with securities laws.

In a Wednesday filing with the U.S. Bankruptcy Court in the Southern District of New York, Vermont’s financial regulator said Celsius and Mashinsky “made false and misleading claims to investors” which allegedly downplayed concerns about volatility in the crypto market, encouraging retail investors to leave their funds on the platform or make new investments. According to the state regulator, Celsius and its CEO “lacked sufficient assets to repay its obligations” despite claiming the firm had enough funds in its reserves to mitigate the risk of insolvency.

The DFR cited company blog posts and tweets from Mashinsky starting in 2021, suggesting that the platform was “profitable or financially healthy” at a time when it was experiencing “catastrophic losses” and “failed to earn sufficient revenue to support returns.” In addition, the regulator said it had learned of credible claims that Celsius and its management team “engaged in the improper manipulation of the price of the CEL token,” using investor funds to purchase additional tokens and pay out many to depositors as interest.

Notwithstanding the extreme market volatility, Celsius has not experienced any significant losses and all funds are safe.
— Alex Mashinsky (@Mashinsky) May 11, 2022

“By increasing its Net Position in CEL by hundreds of millions of dollars, Celsius increased and propped up the market price of CEL, thereby artificially inflating the company’s CEL holdings on its balance sheet and financial statements,” said DFR assistant general counsel Ethan McLaughlin. “Excluding the Company’s Net Position in CEL, liabilities would have exceeded its assets since at least February 28, 2019. These practices may also have enriched Celsius insiders, at the expense of retail investors.”

The financial regulator called for an investigation into Celsius’ alleged manipulation of the CEL tokens’ price, which “artificially inflat[ed] the value of the company’s net position in CEL on its balance sheet and financial statements.” Though Celsius officially filed for Chapter 11 bankruptcy in July, a balance sheet analysis conducted by the DFR suggested the platform may have been insolvent on May 13, if not earlier.

Cointelegraph reported on Aug. 16 that Celsius may have been on track to run out of funds by October, with a report suggesting the company’s debt was closer to $2.8 billion against its bankruptcy filing claims of a $1.2 billion deficit. During the bankruptcy court proceedings, Celsius co-founder Daniel Leon claimed his stake in the platform, 32,600 common shares, was effectively “worthless.” On Sept. 1, former Celsius users petitioned the bankruptcy court to allow them a legal remedy to recover $22.5 million in the platform’s custody.

Cointelegraph reached out to Celsius and Alex Mashinsky, but did not receive a response at the time of publication.

Finance Redefined: DeFi market fell off the cliff in Q2, but there’s hope

July 15, 2022 Coin Telegraph

Binance

Analytical data reveals that DeFi’s total value locked registered a minor dip from the past week, falling to a value of $56.45 billion.

Welcome to Finance Redefined, your weekly dose of key decentralized finance (DeFi) insights, a newsletter crafted to bring you some of the major developments over the last week.

This past week, the DeFi ecosystem saw several new developments despite a bearish phase brought on by the lending crisis in the crypto market. Another crypto lender, Celsius, with high stakes in DeFi protocols, filed for bankruptcy. The overall DeFi market fell to new lows in the second quarter. However, a new report indicates users haven’t given up hope.

BNB Chain launched a new decentralized application (DApp) platform with an alarm feature. Vermont state regulator opened an investigation into troubled crypto lender Celsius, deeming it deeply insolvent. A DeFi researcher has predicted that Ethereum proof-of-stake (PoS) can help Ether (ETH) overtake Bitcoin (BTC).

The DeFi tokens saw a new flow of bullish momentum over the past couple of days owing to a market-wide green momentum after the inflation data release.

DeFi market fell off cliff in Q2, but users haven’t given up hope: Report

Despite the DeFi market suffering a 74.6% market cap decline in Q2, user activity has remained relatively resilient, says CoinGecko.

In a report published by the crypto data aggregator on Wednesday, CoinGecko reported that the overall DeFi market cap fell from $142 million to $36 million over the second quarter, due mainly to the collapse of Terra and its stablecoin TerraUSD Classic (USTC) in May.

Continue reading

BNB Chain launches DApp platform with ‘Red Alarm’ to warn users about scams

BNB Chain has launched a new platform, DappBay, to discover new Web3 projects. DappBay is equipped with a novel feature called Red Alarm, which assesses project risk levels in real-time and alerts users of potentially risky DApps, according to a Thursday announcement.

Red Alarm is a contract risk scanning tool offered by DappBay that helps users identify high-risk projects to protect their investments from rug pulls and scams. Users can check if a contract address has logical flaws or fraud risks by entering it into the Red Alarm feature.

Continue reading

Vermont becomes the sixth US state to launch investigation against Celsius

Vermont’s Department of Financial Regulation (DFR) issued a warning against troubled crypto lending firm Celsius on Tuesday, reminding users that the crypto lending firm is not licensed to offer its services in the state.

The DFR alleged that Celsius is “deeply insolvent” and doesn’t possess “assets and liquidity” to fulfill its obligations toward the customers. The state regulator accused the crypto lender of mismanaging customers’ funds by allocating them toward risky and illiquid investments.

Continue reading

PoS gives Ethereum the economic structure to overtake Bitcoin, says DeFi researcher

As Ethereum shifts into PoS, a DeFi researcher has argued that the platform can overtake Bitcoin’s throne as the top dog in crypto.

In a Twitter thread, researcher Vivek Raman highlighted that the upcoming Ethereum Merge could create a better economic structure for the smart contract platform. According to Raman, the shift into PoS lowers Ether inflation, gives better security and positions the crypto as a digital bond.

Continue reading

DeFi market overview

Analytical data reveals that DeFi’s total value locked registered a minor dip from the past week, falling to a value of $56.45 billion. Data from Cointelegraph Markets Pro and TradingView shows that DeFi’s top-100 tokens by market capitalization had a mixed week, with several tokens trading in red while a few others registered even double-digit gains.

Aave (AAVE) was the biggest gainer among the top 100 with a 30% rise over the past week, followed by Uniswap (UNI) with a 23% surge. Compound (COMP) registered a 19% surge over the past week, while Curve DAO Token (CRV) also saw a 15% rise in price over the past seven days.

Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education in this dynamically advancing space.

Vermont becomes the sixth US state to launch investigation against Celsius

July 13, 2022 Coin Telegraph

Coin Telegraph

The state financial regulator alleged that Celsius violated state security laws by offering high crypto interest rate accounts to customers and unethically using clients’ funds to invest in illiquid products.

Vermont's Department of Financial Regulation (DFR) issued a warning against troubled crypto lending firm Celsius on Tuesday, reminding users that the crypto lending firm is not licensed to offer its services in the state.

The DFR alleged that Celsius is “deeply insolvent” and doesn’t possess “assets and liquidity” to fulfill its obligations towards the customers. The state regulator accused the crypto lender of mismanaging customers’ funds by allocating them towards risky and illiquid investments.

“In addition to the ordinary risks of cryptocurrency investing, holders of Celsius interest accounts were also exposed to credit risk that Celsius would not be able to return their tokens upon withdrawal.”

The financial regulator noted that the high crypto interest account offered by Celsius qualifies as unregistered security and the firm also lacks a money transmitter license to offer any investment services in the state.

DFR believes Celsius operated without any regulatory oversight and exposed retail customers to high risks investments resulting in heavy losses for them. Keeping these concerns in mind, the state financial regulator has joined the multi-state investigation against the troubled crypto lender.

“The Department believes Celsius has been engaged in an unregistered securities offering by offering cryptocurrency interest accounts to retail investors. Celsius also lacks a money transmitter license. The Department has joined a multistate investigation of Celsius arising from the above concerns.”

Vermont became the sixth state in America to open an investigation into Celsisus’s crypto interest rate accounts. As Cointelegraph reported earlier, Alabama, Kentucky, New Jersey, Texas and Washington opened investigations into the troubled crypto lender after it paused all withdrawals, swaps and transfers between accounts on June 13, just a day after its chief executive officer Alex Mashinsky claimed all is well with the firm.

Celsius became one of the key crypto lenders in the industry during the bull market, managing billions in customers' funds and churning out high interet rates for account holders. While regulators and analysts did warn about risks associated with such high lending products, crypto lenders continued to play it down claiming it was a ploy of greedy bankers.

A recent report in Financial Times highlighted that Celsius aggressively bet with client funds, putting them in risky decentralized finance (DeFi) yield products. The crypto lender’s compliance team had flagged concerns as early as February 2021, where internal documents showed that employees were allowed to invest in funds without gaining explicit permission and without any compliance checks. This reportedly helped the firm to disguise its losses.

However, with the advent of the bear market in May initiated by the Terra ecosystem crash, the faults started to show up. Several reports have highlighted that market conditions are not the only reason for the downfall of crypto-lending firms like Celsius. In fact, it was mismanagement and unethical business practices on their part that have brought them to this point.

Celsius is currently hiring new legal teams and working on restructuring plans to avoid bankruptcy. The firm has also worked on repayment of several DeFi loans over the past couple of weeks, having paid 20 million in USD Coin (USDC) to Aave on July 11 and paid the remaining $41.2 million debt to Maker protocol on Thursday, freeing up more than $500 million in Wrapped Bitcoin (wBTC) collateral.