Reportedly, a company cryptocurrency loan ran out of customers after freezing their accounts amid a crisis that hurt the value of Bitcoin and Ethereum, among others.
In the last hours, Celes, a company of cryptocurrency loan bankrupt, you can cheat the clients with Ponzi schemes.
The facts came out light when Shoba Pillay, independent investigator appointed by the Court to investigate the case, revealed that the company was defrauding its customerss and promoting itself as a different company from the one in which it operates, as detailed Business Insider.
Celsius declared itself in bankruptcy in July 2022, after their accounts were frozen amid a wave of cryptocurrencies that caused the value of Bitcoin (BTC) and Ethereum (ETH) more than one fell 60 to 70% in November 2021 peak ratio.
The company captured the attention of its customers with the promise of high interest yields and readily available loans.
In short, it was presented as an alternative to the traditional "big banks" as Pillay wrote.
The business model that Celsius advertised and sold to its clients was not the business that Celsius actually operated," Pillay said in his presentation to 689 pages in the Southern New York Bankruptcy Court.
In addition, the case investigator revealed that Alex Mashinsky, founder of Celsius, he was forced to make increasingly risky investments to ensure that his clients received the high promises promised, taking loans that are not fully secured and investing in other cryptocurrencies and mining.
This mechanism worked for him during the cryptocurrency boom around of the world in the years 2021 and 2021.
Ultimately, the company's collapse caused its cel token will pass its maximum $8 in June of 2021 to its current value of $0.59 and is one of the most telling flaws, as described by Insider.
It's known that Celsius has devoted most of its resources to artificially inflate the price of the CEL, that is, the token, without any "effort" to determine the reward rates offered in function of its performance.
In fact, Pillay said the company spent $558 million of dollars buying their own cel token in it market in an attempt to shore up its declining assets.
“Celsius has bought every CEL token on the market at least once, and in some cases twice,” Pillay wrote in the report.
The same company acknowledges that the interest rate you pay your customers is not related to the profits you you get by investing the assets of your platform users.
all this could indicate that Celsius is abusing trust of his clients and does not demonstrate professionalism towards his main business: lending cryptocurrency.
In response to the question, Pillay said directly that, "in some cases," between June 9 and 12, 2022, Celsius will use the deposits of new clients to be able to process the requests of withdrawal of others.
Such a practice thus defined Respond to a Ponzi scheme, in which criminals who cannot generate sufficient income to keep your beautiful promises, they use them to reassure their victims and attract new ones, at least for a while, according to the newspaper Moeda.
According to the French press, the lawyer for Celsius proposed a payment plan to creditors based on the issuance of a new CEL token; we have to wait and see if customers regain trust in the company or they reject the proposal.