Failed crypto lending platform Celsius opens withdrawals to a small group of users

Failed crypto lending platform Celsius opens withdrawals to a small group of users

Some users of the now-bankrupt cryptocurrency lending platform Celsius will be given the option to withdraw their funds. According to an official bankruptcy document, a certain group of users will soon be able to take 94% of their wealth from the platform. The court has yet to decide on the remaining 6% of the assets.

impressive development

It is remarkable, to say the least, that a group of users of the platform suddenly have the opportunity to withdraw their funds. At the moment it is still unclear who exactly these users are and what conditions people must meet to belong to this group. Celsius itself also mentions “authorized users” in the article, without going into further detail.

All they mention is that these users must have at least enough assets to pay for the cost of withdrawals. Around February 15, the lucky group of users of the platform will receive an email in which Celsius will give them more clarity. It is not yet clear how many people are involved.

problems for Celsius

The problems for Celsius started in May 2022 with the collapse of the Earth Protocol. As a result of the Terra implosion, virtually the entire market took a huge downturn. During this decline, it became clear that many parts of the industry had taken too many risks. For example, Celsius was known to use client funds to make its own high-risk investments.

Those risky investments did not pay off, and suddenly there was a big hole in the budget. The crypto lending platform never recovered from this shortcoming, forcing it to file for bankruptcy in July 2022. This joins Celsius in a long line of cryptocurrency companies that would not survive 2022. This week it became clear that Celsius has long operated as a classic pyramid scheme.

A classic pyramid scheme

The judge ruled it was a good idea to hire an independent investigator to investigate Celsius. It wasn’t long before Shoba Pillay, the researcher on duty, came back with the conclusion that Celsius worked like a classic pyramid scheme. “Celsius performed in all major facets of its business in a completely different way than how it presented itself to its customers,” said Pillay.

Pillay’s adamant verdict is that Celsius was operating like a lying machine. According to Pillay, Celsius was never able to deliver on promises of crypto staking returns. The reality is that Celsius itself has increased the value of its token to attract more users to the platform. It then paid its existing users with new user credits, which is pretty much the definition of a pyramid scheme.

Notably, according to Pillay, all employees were also aware of the platform’s cryptocurrency lending practices. Celsius employees also saw that the company’s public statements did not correspond to the actual working method. A significant portion of users are expected to get their money back, but that seems extremely unlikely.

Source: Btc Direct

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