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SINGAPORE, Jan 31 (Reuters) – The business model that cryptocurrency firm Celsius Network advertised and sold to its customers was not the business model it actually operated, a U.S. court order announced Tuesday. made clear in the examiner’s report.
From the beginning, Celsius and its founder Alex Mashinski, who are now facing fraud allegations in the United States, did not “live up” on their promises regarding native CEL tokens and other business activities, the report said. says.
Also, Celsius’ stablecoin deficit between May 28, 2021 and last year’s bankruptcy filing was attributed to using customer deposits to acquire stablecoins, resulting in a $1 billion hole in its assets. added.
Hoboken, New Jersey-based Celsius filed for Section 11 protection from creditors in Manhattan last July after freezing customer withdrawals from its platform. The company posted his $1.19 billion deficit on its balance sheet.
A representative for Celsius did not immediately respond to an emailed request for comment sent overnight in the United States.
Cryptocurrency lenders such as Celsius have boomed during the COVID-19 pandemic, luring depositors with high interest rates and access to easy loans rarely offered by traditional banks.
Many have fallen apart since then.
Similar to banks, Celsius collects cryptocurrency deposits from retail customers and sells wholesale virtual assets such as “decentralized finance” and DeFi sites that use blockchain technology to offer services outside the traditional financial sector, from loans to insurance. Invested in the equivalent of the currency market.
U.S. bankruptcy judge Martin Glenn, who is overseeing the Chapter 11 case, appointed former prosecutor Shobha Pillay as an independent examiner in September.
She was tasked with investigating accusations by Celsius customers that the company was operating as a Ponzi scheme and reporting on its handling of cryptocurrency deposits.
Reported by Rae Wee, additional reported by Alun John. Edited by Clarence Fernandez and Louise Heavens
Our standards: Thomson Reuters Trust Principles.
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