After a thorough review, the court-appointed examiner Shoba Pillay has unravelled a report on bankrupt crypto lender Celsius, accusing the firm of misleading the members of the public on its financial stance and modes of operation.
Pillay, a former federal prosecutor and partner at law firm Jenner & Block, examined how customer crypto was stored at Celsius, the level of accuracy of the company’s public representations, how new deposits were used to pay existing customers, among others.
Pillay’s report released on Jan. 30 partly reads:
“Celsius promoted itself as an altruistic organization. Behind the scenes, Celsius conducted its business in a starkly different manner than how it marketed itself to its customers in every key aspect.”
However, Pillay made reference to the Celsius initial coin offering in March 2018 which was scheduled to raise $50 million but only generated $32 million. Yet, Celsius did not inform its community of the shortfall.
In the same vein, Celsius founder Alex Mashinsky did not fulfil its promise to buy any unsold tokens. She further revealed that Maskinsky and his company tried to influence the price of the native CEL token but turned out unsuccessful due to accounting shortcomings.
Reacting to the development, crypto expert, Ram Ahluwalia, remarked that Mashinsky and other executives of Celsius will go to jail for a long time because of several offences such as Mashinksy dumping CEL token on retail investors.
1/ The Celsius bankruptcy examiner report is out.
My opinion is that @Mashinsky and other executives will go to jail for a long time.
Celsius propped $CEL token while Mashinsky dumped on retail.
Evidence show willful deception to keep the 'flywheel' going
— Ram Ahluwalia, crypto CFA (@ramahluwalia) January 31, 2023
Meanwhile, Pillay described the Celsius coin deployment process as a ‘Ponzi-like’ arrangement given the fact that the company’s reward rates were not tied to the yield generated from customer assets.
Celsius Sets to Resume Withdrawals
Having halted withdrawals and transfers between accounts due to extreme market conditions, Celsius Network has provided an update on the upcoming withdrawal process for certain assets.
Celsius provided an update on the upcoming withdrawal process for certain assets in certain Custody accounts. https://t.co/Q4oxRHeg4E
— Celsius (@CelsiusNetwork) February 1, 2023
The crypto lender noted that the users will be mandated to update their details before withdrawals can be initiated and processed.
It is noteworthy that only 94% of eligible custody assets can be withdrawn while the possibility of withdrawing the outstanding 6% will be determined by the Court at a later date.
Recall that the United Kingdom-based organization, Celsius Network, recently thought of issuing a new token to repay creditors.