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Celsius’ Examination Reveals Ugly Practices of Crypto Lenders

Story Highlights

Cryptocurrency lender Celsius is being probed for its faulty accounting and operational practices. A report by an independent examiner revealed lax practices that may even be followed by other lenders.

A court-appointed examiner’s report revealed the ugly practices of cryptocurrency lender Celsius Holdings. As per the report, Celsius used customers’ Bitcoin (BTC-USD) and Ethereum (ETH-USD) holdings to buy its proprietary CEL tokens. These tokens were used to pay high yields on its “earn/interest-bearing accounts” as well as to bolster the value of CEL tokens by pumping demand.

Notably, Celsius was unable to earn high yields from the investments it made and hence sold customers’ digital assets to meet service obligations. At the same time, Celsius insiders made millions as a result of the high price of CEL tokens. The report also stated that the firm’s founders, Alex Mashinsky and Daniel Leon, earned $68.7 million and at least $9.7 million, respectively, by selling their CEL tokens between 2018 and July 2022.

The report also pointed out other drawbacks in Celsius’ practices. Notably, Celsius was always short of customers’ deposits of cryptocurrencies. Further, there was a stark contrast between the company’s marketing about its business models and how they actually operated. Celsius even failed to properly vet the counterparties to whom it loaned customers’ coins.

To add to customers’ woes, a recent ruling by Judge Martin Glenn, who is presiding over Celsius’ bankruptcy case, ruled in favor of Celsius’ ownership of customers’ cryptocurrency deposits.

Is Bitcoin a Good Investment?

Bitcoin is currently trading at a 66.9% discount from its all-time high of $68,978.64 touched on November 10, 2021. Currently, the digital asset world remains murky, with no clarity in sight. And hence, investors must be prudent and alert if they invest in cryptocurrencies.


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