Bankrupt crypto lender, Celsius, is reported to have misled investors and often used new customer funds to pay for withdrawals. This report was given during the Tuesday filing by Shoba Pillay, the independent examiner employed by the New York bankruptcy court.
The report stated that Celsius’s operational structure could be likened to a Ponzi scheme. The lender advertised a different thing to its customers while operating riskier businesses. It also failed to report millions of losses while its former CEO, Alex Mashinsky, cashed out $800 million.
Also, Celsius equated its value to the CEL token, stating it was the firm’s backbone. Celsius initially said it intended to raise funds for the business by selling 325 million CEL through private pre-sales and an initial coin offering (ICO) and that these sales would raise $50 million. It also promised customers they would be rewarded, but the firm did not deliver on this promise.
According to the report,
“Celsius abandoned its promise of transparency from its start. Celsius’s first significant transaction after it was formed was to launch its ICO, a transaction that Celsius expected would raise $50 million. That did not happen. Instead, Celsius sold 203 million of the 325 million CEL offered for sale, raising $32 million. But Celsius never told its community that it failed to sell all of the CEL.”
Celsius used customers’ Bitcoin and Ethereum to purchase the CEL token, which left a massive hole in its balance sheet leading to billions of losses upon filing for bankruptcy. The firm also failed to deliver 80% reward rates to its customers because it had no profits to share.
