Examiner finds customer deception, ‘very Ponzi-like’ use of funds at Celsius
Court-appointed examiner Shoba Pillay submitted her final report on select aspects of operations at bankrupt cryptocurrency Celsius on Jan. 31. The document was commissioned on Sept. 29 and is 470 pages long, not counting the 31 appendices.
Pillay is a former federal prosecutor and partner at law firm Jenner & Block. She looked at how customer cryptocurrency was stored at Celsius, the accuracy of the company’s public representations, whether new deposits were used to pay existing customers, the status of the company’s mining business and tax compliance.
“Celsius promoted itself as an altruistic organization,” Pillay wrote. However, “Behind the scenes, Celsius conducted its business in a starkly different manner than how it marketed itself to its customers in every key respect.”
The deception began immediately, Pillay found, when the Celsius initial coin offering in March 2018 failed to raise the hoped-for $50 million, coming in at $32 million. The Celsius community was not told of the shortfall. Nor did founder Alex Mashinsky make good on his promise to buy any unsold tokens.
Further, Pillay documented how the company and Mashinsky personally exerted control over the price of the native CEL token. That effort was not wholly successful, in part due to accounting shortcomings. As a result:
In early 2021, as Bitcoin (BTC) and Ether (ETH) prices rose and customers withdrew more of the CEL cryptocurrency, Celsius “justified its use of customer deposits to fill this hole in its balance sheet on the basis that it was not selling customer deposits but instead posting them as collateral to borrow the necessary coins.”
1/ The Celsius bankruptcy examiner report is out.My opinion is that @Mashinsky and other executives will go to jail
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