Sale time for Celsius. The cryptocurrency investment platform has been accumulating bad news in recent weeks.
Freeze of withdrawals, then bankruptcy
Whereas, on June 7, Celsius boasted “to have one of the best risk management teams in the world”, the discourse changed a few days later. Indeed, on June 12, the company froze withdrawals on its platform. Without this freeze, she explained that withdrawals would have accelerated, allowing “to some customers – the first to act – to be fully reimbursed, but rewarded the others behind, to wait”. Namely, before suspending withdrawals, the platform offered interest rates of more than 18% for savers and 0.1% for borrowers.
A month later, on July 13, the company filed for US bankruptcy. This recourse allows a company that can no longer repay its debt to restructure itself protected from creditors, while continuing its current operations. She explained that this would allow her to restructure in order to “maximizing value for all parties involved”specifying to have 167 million dollars of available cash.
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
the declaration of bankruptcy, the customers of the platform are desperate. As proof, hundreds of letters from users 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 hope the court will help them recover at least some of the money invested, but it could take several years…
Bad news never comes alone…
Beyond the withdrawal freeze and bankruptcy, Celsius customers also face phishing risks after their data is leaked. Indeed, at the end of July, the company informed its users that their email addresses had been revealed 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 area. In April 2021, they had already been targeted by a fraudulent website claiming to be the official platform.
Celsius: a case that is not isolated
Celsius was one of the biggest players in the cryptocurrency industry. The platform lent money and remunerated deposits, trading on the plates of banks, without however offering the same guarantees.
But, faced with the cryptocurrency plunge — bitcoin having lost more than 60% since November — several companies, like Celsius, have frozen withdrawals or declared bankruptcy.