Bad weather for Celsius. The cryptocurrency investment platform has been accumulating bad news in the past few weeks.
Blocking of withdrawals, then bankruptcy
While, on June 7, Celsius was boasting “Have one of the best risk management teams in the world”, the speech changed a few days later. In fact, on June 12, the company froze withdrawals on its platform. Without this block, he explained that withdrawals would be accelerated, permitting “some customers – the first to act – must be fully reimbursed, but leaving others to wait”. That is to say, before suspending withdrawals, the platform offered interest rates above 18% for savers and 0.1% for borrowers.
A month later, on July 13, the company filed for bankruptcy in the United States. This recourse allows a company that can no longer repay its debt to restructure itself away from creditors, while continuing its current operations. She explained that this would allow her to restructure to do so “Maximize the value for all stakeholders”specifying that it has $ 167 million in liquidity available.
I am sure that when we look back on the history of Celsius, we will see this moment as crucial, a moment when we will have […] consolidated the future of the company.
Desperate and angry customers
Since filing for bankruptcy, the platform’s customers have been desperate. As evidence, hundreds of user letters have reached the court in charge of the case, where we find a mixture of anger, shame and regret.
Celsius now owes $ 4.7 billion to its 1.7 million users. The victims are hoping that the court will help them recover at least some of the money invested, but it could take several years …
Bad news never comes alone …
In addition to withdrawal blocking and bankruptcy, Celsius customers also face phishing risks after their data is leaked. In fact, at the end of July, the company informed its users that their email addresses had been leaked to a malicious third party by an engineer from Customer.io, one of the platform’s email providers.
It should be noted that this is not the first disappointment for Celsius customers in this industry. By April 2021, they had already been targeted by a fraudulent website claiming to be the official platform.
Celsius: a non-isolated case
Celsius has been a major player in the cryptocurrency industry. The platform lent money and paid deposits, walking on the tips of the banks, but without offering the same guarantees.
But, in the face of the cryptocurrency crash – bitcoin has lost more than 60% since November – several companies, such as Celsius, have frozen withdrawals or filed for bankruptcy.