Celsius Supported Its Token as Insiders Benefited: Examiner
• A US bankruptcy examiner report revealed that the crypto lender Celsius Network inflated its balance sheet as two of its founders paid out millions by using investor funds and client deposits to support its own coin.
• The investigation Shoba Pillay, a former prosecutor, was commissioned by U.S. Bankruptcy Judge Martin Glenn to look into complaints from Celsius clients that the business ran like a Ponzi scheme and of reporting on how it handled bitcoin deposits.
• It was found that Celsius used customer cryptocurrency deposits to buy CEL tokens on the wholesale market, thus driving up its price while luring in new customers.
Crypto Lender Celsius Misused Funds
A US court-ordered examiner report made public on Tuesday revealed that the bankrupt cryptocurrency lender Celsius Network misused customer money to benefit itself. During the COVID-19 pandemic, cryptocurrency lenders like Celsius saw a surge in business, luring depositors with high interest rates and convenient loan access. Following the suspension of customer withdrawals from its platform, New Jersey-based Celsius filed for bankruptcy in the United States in July of last year.
Investigation Commissioned by US Bankruptcy Judge
Shoba Pillay, a former prosecutor, was designated as an independent examiner by U.S. Bankruptcy Judge Martin Glenn who is presiding over the Chapter 11 case in September last year. She was given the responsibility of looking into complaints from Celsius clients that the business ran like a Ponzi scheme and of reporting on how it handled bitcoin deposits.
Celsius Used Customer Deposits to Buy Its Own Token
The report revealed that retail customers‘ cryptocurrency deposits were collected by Celsius which then used them to buy cryptocurrency in equivalent value on the wholesale market – namely their own token called ‘CEL’ – thus raising funds for their own business while inflating its price at same time through increased demand from new customers lured in due to offers of rewards when buying CEL tokens using deposited cryptocurrencies .
Insiders Benefited From Self-sustaining „Flywheel“ System
The corporation promised customers that it would purchase CEL on the secondary market and deliver it to them as rewards, creating what it dubbed a self-sustaining „flywheel“ system which benefited insiders but not retail investors who were left without access to their funds following company’s subsequent bankruptcy filing last year .
Requests for Comment Unanswered
Requests for comment from reporters were addressed several addresses including an email on Celsius‘ website but no response has been received yet at time of writing this article .