Cryptocurrencies: the descent into hell of the customers 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 has lost all her savings – clients of the cryptocurrency investment platform Celsius are desperate.

• Read also: Cryptocurrency platform Celsius declares bankruptcy

• Read also: Bitcoin plummets to lows since the end of 2020

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

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

“I knew there were risks,” said one client, for example, who did not sign his testimony. “It seemed worth it.”

Celsius was one of the most important players in this sector, which lends money and pays off deposits, playing on the bank’s turf without offering the same guarantees.

The platform offered interest rates above 18% for savers, but 0.1% for borrowers. It had 1.7 million customers in June.

But in the face of the cryptocurrency crash – bitcoin has lost more than 60% since November – several companies have blocked withdrawals and / or filed for bankruptcy in the United States.

“From the single mother from Texas who works hard and struggles to pay the bills, to the Indian teacher who put her hard-earned cash on Celsius – I think I speak for everyone when I say that I feel betrayed, ashamed, depressed and angry” , wrote “EL”, a customer.

Celsius and his boss, Alex Mashinsky, had ensured that the platform was a safe place to deposit his cryptocurrencies. It now owes $ 4.7 billion to its customers.

Their letters, accessible from the court’s public database, often recount dramatic consequences, regardless of whether the loss amounts to hundreds or millions of dollars.

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

“Alex Mashinsky completely lied to me,” said one, who calls himself “a loyal Celsius customer since 2019”. “Alex said Celsius was safer than banks,” he added.

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

“We have already experienced other cryptocurrency declines (this is our fourth!). Celsius is ready, ”indicated the company.

He claimed he had the reserves to pay his obligations. Withdrawals worked normally.

But that all changed on June 12, when he announced the blockade.

Without it, he then explains, withdrawals would be “accelerated”, allowing “some customers – the first to act – to be fully reimbursed, leaving the others to wait”.

It is, he promises, restructuring to “maximize value for all stakeholders”.

Some customers then receive a message from the company.

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

Clients who claim to be most affected, including one individual who claims to have borrowed $ 525,000 from the government, say they have considered suicide.

Others speak of stress, loss of sleep, and their deep shame at risking their savings or funds set aside to pay for their children’s college.

As a private company, in an unregulated industry, Celsius had few obligations to fulfill.

“Most of these companies have made loans without collateral or with insufficient collateral,” says Antoni Trenchev, co-founder of Nexo, another crypto platform that, according to him, has managed to get away with a stricter lending policy. and “prudent risk management”.

One of the customers is an 84-year-old woman, who decided to put her $ 30,000 in cryptocurrency savings on Celsius a month before withdrawals were blocked.

The victims hope that the court handling the bankruptcy procedure will help them recover at least part of their money. It could take years.

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

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