Crypto: the bankruptcy of the Celsius platform despairs its 1.7 million customers

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: the customers of the Celsius cryptocurrency investment platform are desperate.

that the company has been declaring itself bankrupt since mid-July, hundreds of letters from former users have reached court, laden with anger, shame and, often, regret. ” I knew there were risks “says for example a client, who has not signed his testimony. ” It seemed worth it “.

Celsius was one of the most important players in this sector, which lend money and remunerate deposits, playing on the ground of banks without offering the same guarantees. The platform offered interest rates over 18% for savers, but 0.1% for borrowers. It had 1.7 million customers in June.

But in the face of the cryptocurrency plunge – bitcoin has lost more than 60% since November – several companies have frozen withdrawals and/or filed for US bankruptcy.

“Betrayed, ashamed, depressed and angry”

From the single mother from Texas who works hard and struggles to pay her bills, to the Indian schoolteacher who put her hard-earned money on Celsius – I think I speak for everyone when I say I feel betrayed, ashamed, depressed and angry », a writing « EL », a customer.

Celsius and its patron, Alex Mashinsky, had assured that the platform was a safe place to deposit its cryptocurrencies. It now owes $4.7 billion to its clients.

Their letters, accessible on the court’s public database, recount often dramatic consequences, whether the loss amounts to hundreds or millions of dollars. They come from all over the world, from inexperienced crypto enthusiasts to evangelists of these new assets. They almost all agree on one point: their trust has been betrayed.

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

One of the clients is an 84-year-old woman, who decided to place her $30,000 in cryptocurrency savings on Celsius a month before the withdrawal freeze.

“I collapsed on the ground, my head in my hands”

Again on June 7, Celsius boasted “ to have one of the best risk management teams in the world “. ” We’ve been through other crypto dips before (this is our fourth!). Celsius is ready “, indicated the firm. She claimed to have the reserves to pay her obligations. Withdrawals were working normally.

But everything changed on June 12, when she announced the freeze. Without it, she explains then, the withdrawals would have been “ accelerated », allowing « some customers – the first to act – to be fully reimbursed, justifying the others behind to wait “. It is a question, she promises, of restructuring to maximize value for all parties involved “.

Some customers then receive a message from the company. ” When I finished reading the email, I collapsed on the floor, my head in my hands, trying to hold back my tears. says a man who had about $50,000 in assets stored at Celsius.

Clients who say they were hit harder, including an individual who claims to have placed $525,000 borrowed from the government, confess to possibly suicide.

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

No or few guarantees for customers

As a private company, in an unregulated sector, Celsius had few obligations to fulfill. ” The majority of these companies made loans without collateral or with reduced collateral says Antoni Trenchev, co-founder of Nexo, another crypto platform he says got away with a stricter lending policy and a “ prudent risk management “.

Victims are hoping that the court handling the bankruptcy process will help them recover at least some of their money. It could take years.

Of course I’m sorry for all those who lost their funds in this way “Don Coker, a legal expert in banking and finance, told AFP. ” But this is one area where they need to be aware of the risks “.

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