BlocksInform
Celsius dropped its promise of transparency early on, according to former attorney shoba pillay who was appointed independent reviewer by US bankruptcy judge Martin Glenn.
In a filing, Pillay stated that the bankrupt crypto firm conducted its business in a starkly different manner than how it marketed itself to its customers in every key respect.
The report argued that the degree Celsius did not have an adequate risk management function and that it was incapable of monitoring its financial situation or assessing its profitability. He also said that Celsius and its founder Alex Mashinsky, who is currently dealing with allegations of fraud in the US, have not kept their generous promises.
Very Ponzi-Like Operations
The reviewer interviewed Celsius employees, including former CEO Alex Mashinsky, as well as the company's customers and suppliers to determine whether it was operating a Ponzi scheme. Pillai said Celsius inflated the price of its native CEL token "to get the appraisals to be able to resell to the company."
Celsius recognizes that customers' funds must not be tampered with to purchase the coins needed to cover debts owed to other customers. It still used customer deposits to cover its $1 billion balance sheet shortfall. The company's rationale was that it posted customer deposits as security for borrowing the required parts rather than selling them.
The product was then used for further purchase of this.
As of April 2022, Dean Tappen, a specialist in the deployment of Celsius coins, himself described the company's practice of "using customers' valuables" and "depriving itself of customers' coins" to purchase cel as "very ponzi." pillay also claimed that employees were aware of the discrepancies in funds, but chose to remain silent on the matter.
Additionally, Celsius never used up any of his cash, although he was scrambling for cash until June 12, 2022, when all client withdrawals have been interrupted.
While speaking about Mashinsky, a manager of the company was even quoted saying,
“we spent all our cash paying execs and trying to prop up alexs [sic] net worth in CEL token.”
Who’s Coins?
Mashinsky, repeatedly, Points out to clients and prospects that crypto assets belong to them and not Celsius by using phrases such as as "your exhibits," "my exhibits," or "your crypto." the frame completely retro-located during the examiner's interrogation. Instead, he stated,
“100% of the actions are our actions, (the customer) can’t take any action (themselves) on the platform.”
Pillai added that Celsius has made efforts to subsequently edit some of the misinformation from the recorded WADA videos. However, the Board has not retracted or corrected inaccurate or misleading statements made during on-line MAAs or prior to the implementation of amendments.
