Cryptocurrency platform Celsius in bankruptcy, ruining its customers

An Irishman about to lose his farm, an American on the verge of suicide, an 84-year-old widow who has lost all her life savings: customers of cryptocurrency investment platform Celsius are in despair. Since the company filed for bankruptcy in mid-July, hundreds of letters have been received in court from former users, filled with anger, shame, and often regret.

“I knew there were risks,” said one client, for example, who did not sign his statement. “It seemed worth it.” Celsius has been one of the major players in this sector, lending money and remunerating deposits and gambling on bank floors without offering the same guarantees. The platform offered interest rates of over 18% for savers but 0.1% for borrowers. In June it had 1.7 million customers.

Celsius owes customers $4.7 billion

But with the cryptocurrency plummeting (Bitcoin is down more than 60% since November), several companies have frozen withdrawals and/or filed for US bankruptcy. However, Celsius and its boss, Alex Mashinsky, had assured that the platform was a safe place to deposit their cryptocurrencies. It now owes its customers $4.7 billion.

Her letters, available in the court’s public database, tell of often dramatic consequences, whether the loss amounts to hundreds or millions of dollars. They come from all over the world, from novice crypto enthusiasts to evangelists of these new assets. Almost everyone agrees on one point: their trust has been abused.

betray trust

“From the hard-working, single mother in Texas who struggles to pay her bills, to the schoolteacher in India who puts her hard-earned money into Celsius, I think I speak for everyone when I say that I am feeling betrayed, embarrassed, depressed and pissed off,” one customer wrote to EL. “Alex Mashinsky completely lied to me,” said one, who describes himself as a “loyal Celsius customer since 2019.” “Alex said Celsius is safer than banks,” he added.

On June 7, Celsius once again boasted of “having one of the best risk management teams in the world.” “We’ve seen other crypto declines before (this is our fourth!). Celsius is ready,” the company said. She claimed to have the reserves to pay her commitments. Withdrawals worked normally. But everything changed on June 12 when she announced lockdown.

Without it, she explained at the time, withdrawals would have “sped up” so that “some customers who act first get a full refund and the others have to wait.” It’s possible, she promises, to restructure to “maximize value for everyone involved.” Some customers then receive a message from the company.

Stress, lack of sleep and suicidal thoughts

“When I finished reading the email, I collapsed on the floor with my head in my hands trying to hold back my tears,” said a man who had about $50,000 in assets stored at Celsius. Customers who say they are more affected, including one person who claims to have borrowed $525,000 from the government, say they have had thoughts of suicide. Others talk about stress, lack of sleep, and their deep shame at risking their life savings or money set aside to pay for their kids’ college.

As a private company in an unregulated industry, Celsius had few obligations to meet. “The majority of these companies have been lending with no collateral or with insufficient collateral,” says Antoni Trenchev, co-founder of Nexo, another crypto platform that he says has gotten away with tighter lending policies and prudent risk management. The victims hope that the bankruptcy court will help them recover at least some of their money. It could take years.

Kaddouri Ismail

I am Ismail from Morocco, I work as a blogger and online marketer. I am also the founder of the “Mofid” site, in which I constantly publish many important articles in the field of technology, taking advantage of more than 5 years of experience working in the field. I focus on publishing in a group of areas, the most important of which are programming, e-marketing, digital currencies and freelance work.

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