Cryptocurrency: the descent into hell of the clients of the fallen Celsius platform

An Irishman on the verge of losing his farm, an American with suicidal thoughts, an 84-year-old widow who lost all her savings: clients of the Celsius cryptocurrency investment platform are in despair.

• Read also: Cryptocurrency platform Celsius files for bankruptcy

• Read also: Bitcoin fell to its lowest level since the end of 2020.

• Read also: Celsius Network, partner of Caisse de dépôt under the AMF magnifying glass

Since the company filed for bankruptcy in mid-July, hundreds of letters have come to court from former users filled with anger, shame, and often regret.

“I knew there were risks,” said a client who did not sign his statement, for example. “Seems like it was worth it.”

Celsius was one of the most important players in the sector, lending money and rewarding deposits by playing in the land of banks without offering the same guarantees.

The platform offered interest rates of over 18% for savers and 0.1% for borrowers. In June, he had 1.7 million customers.

But faced with the fall of the cryptocurrency — bitcoin has lost more than 60% since November — several companies have frozen withdrawals and/or filed for bankruptcy in the US.

“From a Texas single mother who works hard and struggles to pay her bills to an Indian schoolteacher who invested her hard-earned money in Celsius, I think I speak for everyone when I say I feel devoted. pissed off,” wrote a customer to EL.

Celsius and his boss Alex Mashinsky assured that the platform is a safe place to store their cryptocurrencies. He now owes his clients $4.7 billion.

Their letters, available on the court’s public database, often deal with dramatic consequences, whether the losses are in the hundreds or millions of dollars.

They come from all over the world, from inexperienced crypto enthusiasts to evangelists of these new assets. Almost all of them agree on one thing: their trust has been betrayed.

“Alex Mashinskiy completely lied to me,” said one who describes himself as a “Celsius loyal customer since 2019.” “Alex said that Celsius is safer than banks,” he added.

On June 7, Celsius boasted “one of the best risk management teams in the world.”

“We have already gone through other cryptocurrency falls (this is our fourth!). Celsius is ready,” the firm said.

She claimed that she had reserves to pay her obligations. The withdrawal worked fine.

But everything changed on June 12, when she announced a freeze.

Without it, she explains at the time, withdrawals “would have accelerated,” allowing “some customers – first to act – to receive a full refund, leaving the rest to wait.”

This, she promises, is a restructuring to “maximize value for all stakeholders.”

Then some customers receive a message from the company.

“When I finished reading the email, I collapsed to the ground with my head in my hands, trying to hold back my tears,” said the person, who had about $50,000 in assets held at Celsius.

Clients who say they have been hit harder, including a man who claims to have posted $525,000 borrowed from the government, say they have considered suicide.

Others speak of the stress, insomnia, and deep shame at risking their savings or their kids’ college tuition.

As a private company in an unregulated industry, Celsius had few commitments.

“Most of these companies were lending without collateral or under collateral,” says Antoni Trenchev, co-founder of Nexo, another crypto platform that he says has gotten away with stricter lending policies and “prudent risk management.”

One of the clients is an 84-year-old woman who decided to deposit her $30,000 crypto holdings on Celsius a month before the withdrawal freeze.

Victims hope that the bankruptcy court will help them get at least some of their money back. It may take years.

“Obviously I feel sorry for everyone who lost their funds in this way,” Don Cocker, a legal expert in banking and finance, told AFP. “But this is an area where they need to be aware of the risks.”

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