Crypto: Bankrupt Celsius founder appeals for help from Elon Musk

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Celsius Network was one of the leading crypto companies to file for bankruptcy during the liquidity crisis within the nascent blockchain-powered financial services industry last summer.

The crypto lender was also among the very first companies to suspend customer withdrawals in mid-June, before finally filing for Chapter 11 bankruptcy just over a month later.

The company then explained that it was a collateral victim of the collapse of sister cryptocurrencies Luna and UST or TerraUSD. These two tokens had fallen after a run on the bank, which then affected all the companies exposed to them, such as the hedge fund Three Arrows Capital.

Three Arrows Capital, or 3AC, had received large sums of money from many crypto lenders like Celsius and Voyager Digital to invest. When the hedge fund was forced into liquidation, all of its clients paid a heavy price.

Celsius functioned as a bank in the crypto universe. It was essentially an entity working as an intermediary between different actors.

His business model was to lend, to hedge funds and other institutional investors, the cryptocurrencies of his clients, to whom he promised significant high returns. It promised 18% interest rates to customers who deposited their cryptocurrencies. This is a much higher rate than that offered by traditional savings accounts.

Celsius owes customers $4.7 billion

These pledges have helped Celsius, founded in 2017, build more than $20 billion in assets in five years. To critics who felt the company’s model wasn’t sustainable over time, founder and CEO Alex Mashinsky insisted it was possible. In a complaint filed by one of its fund managers, Jason Stone of KeyFi, the company was accused of operating a Ponzi scheme. He denied the allegations.

When Luna and USD crashed, Celsius struggled to withdraw funds from their ecosystem, Terra Anchor Protocol.

“As the credit crisis spread like wildfire through the industry last summer, Mashinsky said his business was financially sound. He said there was no need to worry.

“Do you even know anyone who has trouble withdrawing from Celsius?” Mashinsky asked a Twitter user on June 11. The following day, Celsius announced that it was suspending client withdrawals and other operations due to “extreme market conditions”.

Celsius said in June that it owed clients nearly $4.7 billion in crypto. The lender said it had 1.7 million customers, including 300,000 with accounts valued at more than $100, according to its bankruptcy filings.

The company has come under pressure from retail investors who want some of their money back. These investors are organizing on social networks and their goal is to push the US Securities and Exchange Commission or/and the Federal Trade Commission, which is supposed to protect consumers, to open investigations into Celsius.

This campaign has gone wrong, according to Mashinsky, who has just indicated on his Twitter account that his family has received threats. He does not give details.

But he called Elon Musk, the new owner of Twitter, for help. He asked the billionaire to intervene because the threats would have been made on the social network.

“Hi @elonmusk, please take action against users who have threatened my family with physical abuse in the past 6 months,” Mashinsky tweeted at Musk on Dec. 7. people to sign up for their service.”

Physical violence

Mashinsky’s plea is accompanied by tweets from his wife in which she says the couple’s children have been threatened by anonymous people.

Krissy Mashinsky reported the threats to Twitter and received a response saying the accounts in question did not violate the platform’s rules.

But if you click on the links inserted in one of her messages, the messages she quotes are no longer available. Instead, a message reads: “This Tweet has violated the Twitter Rules.”

“Roxas no use deleting. Do South West Australia treat you well. Look up 🛰️ Never threaten my children again. Review your account now. @waybackmachine @Twitter https://twitter .com/tweetsbybrayden/status/1536224747314630657,” Krissy Mashinsky posted on Dec. 4.

Two days later, Krissy Mashinsky posted the following message:

“As a parent to another and now that you are responsible @elonmusk, please review this response regarding the public threats made against my children on Twitter. Specifically this one. Thank you. @TwitterSupport,” she said. .

Mashinsky resigned as CEO on September 27, saying he was becoming “a distraction” to the company he founded. This company, once valued at $3 billion, is currently in bankruptcy proceedings.

“With immediate effect, please accept my resignation as CEO of Celsius Network Ltd, as well as my directorships and other positions in each of its direct and indirect subsidiaries, with the exception of my position as Director at Celsius Network Ltd. “, he wrote in a resignation. letter.

“I regret that my continued role as CEO has become an increasing distraction, and I am truly sorry for the financial hardship our community members are facing.”

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