A former investment manager sues Celsius for fraud, saying the crypto lender ran a Ponzi scheme by using customer deposits to rig the price of its crypto token
A former investment manager at Celsius Network sued the crypto lender on Thursday, saying it used customer deposits to rig …
ReutersJonathan Stempel
Context & Ripple Effects
The complaint is an early legal articulation of concerns that later coverage deepened: [[a:980782|former staff and internal documents described compliance warnings about oversight and financial reporting]], while Vermont later alleged that Celsius used CEL to bolster its balance sheet.
Celsius must defend a fraud claim alleging that customer assets were used to support CEL’s price, placing its handling of deposits and token transactions under legal scrutiny.
Customers whose deposits were allegedly used in the scheme gain a detailed account tying their funds to Celsius’s token-market activity and yield model.
Crypto lenders that use proprietary tokens alongside customer deposits face greater pressure to distinguish token-market operations from the custody and lending of client assets.
Third-order effects
If complaints, regulatory filings and examiner reviews continue to converge on the same practices, crypto lending’s credibility will depend less on advertised yield and more on verifiable separation between customer assets, balance sheets and affiliated tokens.
The trend: Celsius is a case study in the crypto legitimacy gap, where opaque yield products and issuer-controlled tokens turn operational stress into legal and trust crises.
Given the public speculation about the company's solvency, and my observation of Celsius' loose relationship with the truth, I feel it is only prudent to finally set the record straight. I have brought legal action against Celsius to settle this issue once and for all.
But in late Feb 2021, we discovered Celsius had lied to us. They had not been hedging our activities, nor had they been hedging the fluctuations in cryptoasset prices. The entire company's portfolio had naked exposure to the market.
Jason has a lawsuit against Celsius so this is only one side of the story. But if we assume this thread is true, Alex Mashinsky will go down in history as one of the dumbest humans on earth. He operated like a degenerative gambler with all our money. Hard to grasp it all still. h…
Witness the spawning of a new legal industry: Class action lawsuits alleging crypto as a Ponzi scheme. Crypto-litigation will soon dominate class action dockets and become a focal point of business development for law firm class action legal defense teams. https://www.reuters.com…
1/ The Celsius filing is just too juicy to read w/o sharing. Here're the few gems I found after a quick scan of the official docs. Buckle up, and let's dive in! https://twitter.com/...
“Faced with a liquidity crisis, Celsius began to offer double-digit interest rates in order to lure new depositors, whose funds were used to repay earlier depositors and creditors” https://twitter.com/...
I have tried for over a year to quietly settle this dispute with Celsius. Pursuant to the contracts Celsius signed with KeyFi, they owe KeyFi a significant sum of money. We have been more than reasonable in attempting to resolve this with them.
Anyone with one iota of sense could tell this was a Ponzi. There's no such thing as riskless 18% return, it's just paying out old investors from new investors. It could *only* have been a Ponzi. https://www.reuters.com/...