Crypto customers ask for money back after lender’s crash

Crypto customers ask for money back after lender’s crash
Crypto customers ask for money back after lender’s crash

Clients of crashed crypto lender Celsius are fighting to get their money back

Clients of crashed crypto lender Celsius are fighting to get their money back.

An Irish man in danger of losing his farm. An American who has suicidal thoughts. 84-year-old widow’s lost life savings: People caught up in the collapse of crypto lender Celsius are asking for their money back.

Hundreds of letters have poured in to the judge overseeing the firm’s multibillion-dollar bankruptcy, heavy with anger, shame, desperation and often remorse.

“I knew there was risk,” said one client whose letter was unsigned. “It seemed like a worthwhile risk.”

Celsius and its CEO Alex Mashinsky had billed the platform as a safe place for people to deposit their cryptocurrencies in exchange for high interest rates, while the firm lent and invested those deposits.

But as the value of highly volatile cryptocurrencies plummeted — bitcoin alone has fallen more than 60 percent since November — the firm faced mounting problems until it froze withdrawals in mid-June.

The company owed $4.7 billion to users, according to a lawsuit filed earlier this month, and the endgame is unclear.

The letters – posted to a public court case online – come from all over the world and tell of the tragic results of users’ money being frozen.

“From the hard-working single mother in Texas struggling with overdue bills, to the teacher in India with all her hard-earned money invested in Celsius – I think I can speak for most of us when I say that I feel betrayed, ashamed, depressed , angry,” wrote a client who signed his letter EL

While the letters vary in their level of sophistication about the crypto world – from self-confessed newbies to all-in evangelists – and the financial ramifications range from a few hundred dollars to seven-figure sums, almost all agree on one thing.

“I have been a loyal Celsius customer since 2019 and feel completely lied to by Alex Mashinsky,” wrote one client whom AFP is not identifying to protect his privacy. “Alex wanted to talk about how Celsius is safer than banks.”

Many of the letters point to the CEO’s AMA (Ask Mashinsky Anything) chat as key to their trust in him and the platform, which presented itself as stable until days before it froze users’ funds.

Repeat insurances before the autumn

“Celsius has one of the best risk management teams in the world. Our security team and infrastructure are second to none,” the firm wrote on June 7.

“We’ve weathered crypto downturns before (this is our fourth!). Celsius is prepared,” the firm wrote.

The message also said the company had reserves to pay its obligations, and withdrawals were processed as normal.

One client, who reported having $32,000 in crypto locked up in Celsius, noted the impact.

“Right up until the end, the private investor got insurance,” the client wrote to the judge.

But that quickly changed, and on June 12 Celsius announced the freeze: “We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal commitments.”

Some customers received the news in a message from the company.

“By the time I finished the email, I had collapsed on the floor with my head in my hands, fighting back tears,” wrote one man who had about $50,000 in Celsius assets.

The clients who said they were hardest hit, including a man who said he placed $525,000 he received from a government loan on Celsius, revealed they had considered suicide.

Others reported severe stress, lack of sleep, and deep shame for putting their retirement savings or their children’s college money on a platform that was far riskier than they knew.

“As a private, unregulated company, Celsius is not subject to any disclosure requirements,” is how the Washington Post summarized the situation.

Celsius did not respond to a request for comment on the clients’ letter.

For people like an 84-year-old woman, who only had her approximately $30,000 in crypto savings on Celsius for a month, their hope lies in bankruptcy proceedings.

“It’s just not unusual for people to come out of something like this with zero,” said Don Coker, an expert witness on banking and finance.

“Obviously I feel sorry for anyone who loses an investment like this, but it’s just something where they need to be aware of the risk,” he said.

The world of crypto lending is reeling under risk and turmoil

© 2022 AFP

Citation: Crypto customers ask for money back after lender’s crash (2022, July 31) retrieved July 31, 2022 from

This document is subject to copyright. Except for any fair trade for the purpose of private study or research, no part may be reproduced without written permission. The content is provided for informational purposes only.

See also  Russian media watchdog lifts blocking of cryptocurrency news page after allegations of money laundering

Leave a Reply

Your email address will not be published.