alex mashinsky

A U.S. court-ordered examiner report made public on Tuesday revealed that the bankrupt cryptocurrency lender Celsius Network inflated its balance sheet as two of its founders paid out millions by using investor funds and client deposits to support its own coin.

During the COVID-19 pandemic, cryptocurrency lenders like Celsius saw a surge in business, luring depositors with high interest rates and convenient loan access. Following the suspension of customer withdrawals from its platform, New Jersey-based Celsius filed for bankruptcy in the United States in July of last year.

The investigation

Shoba Pillay, a former prosecutor, was designated as an independent examiner by U.S. Bankruptcy Judge Martin Glenn, who is presiding over the Chapter 11 case, in September. She was given the responsibility of looking into complaints from Celsius clients that the business ran like a Ponzi scheme and of reporting on how it handled bitcoin deposits.

Requests for comment from reporters were addressed to several addresses, including an email on Celsius’ website, a public relations company that represented Celsius at the time of its bankruptcy, and CEO Alex Mashinsky’s attorney. Celsius did not immediately react to any of these requests. After the report’s publication and during the night in American time, the demands were made.

Retail clients’ cryptocurrency deposits were collected by Celsius, who then used them to buy cryptocurrency in the equivalent of the wholesale market. It raised some of the first funds to fund its business by inventing and selling its own crypto currency, dubbed “CEL”.

According to the investigation, the corporation promised customers that it would purchase CEL on the secondary market and deliver it to them as rewards. The report claimed that this would increase CEL’s pricing while simultaneously bringing in new customers