Troubled crypto lender Celsius Network reportedly hit by a Federal probe

Crypto lender Celsius Network is one of the most popular victims of the sudden sell-off in the cryptocurrency market, which was partly brought on by the failure of the Terra blockchain in May. The now-bankrupt crypto lender is still dealing with legal issues.

The company is reportedly under investigation by the US federal government, according to a filing made on Tuesday by attorneys for its committee of unsecured creditors. It’s important to note that the committee eventually represented a number of Celsius customers who became the company’s unsecured creditors.

The volume and scope of government inquiries into the debtors are “significant,” according to a council.

Several states are targeting Celsius 

The company, which has previously been the subject of inquiries from the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and Federal Trade Commission, has been the target of enforcement actions or inquiries in nearly 40 states, as well as inquiries or investigations involving the federal government. According to Bloomberg, the document also included a statement from the Texas State Securities Board warning Celsius of being the target of several states.

Numerous clients have sent letters to the judge overseeing the case accusing the lender and its former Chief Executive Officer, Alex Mashinsky, of misleading them of the risks involved in surrendering their digital assets to the company. As a result, the judge appointed an independent examiner to look into these matters among others.

In June, Celsius put a freeze on customer withdrawals in order to prevent a potential “panic run” by users. A month later, it submitted Chapter 11 bankruptcy filings, as TheCoinRise reported.

The company’s founder Alex Mashinsky, who resigned as the CEO of Celsius in September, also encountered challenges. Weeks before customer withdrawals were stopped by Celsius, the executive reportedly took $10 million out of the company. 

Following Mashinsky, another co-founder, Daniel Leo, also submitted his letter of resignation in the midst of the bankruptcy proceedings.