Shoba Pillay, court-appointed examiner It submitted her final report on the partial operations of Celsius’ bankruptcy Jan. 31. The document was released Sept. 29 and was 470 pages long, excluding 31 appendices.
Pillay is a former federal prosecutor. and a partner at the law firm Jenner & Block, where she will determine how clients’ cryptocurrencies are stored at Celsius, as well as the accuracy of the company’s public data. This includes the use of new deposits to pay existing customers, the status of the company’s mining business, and its tax practices.
“Celsius advertises itself as an altruistic organization.” Pillay write However, “behind that Instead, it operates in a completely different way than how it markets to customers in all the areas that matter.”
Pillay mentioned during the Celsius ICO in March 2018 that failed to raise the $50 million it had hoped for. It was raised at $32 million, and the Celsius community was not informed and founder Alex Mashinsky did not keep his promise to buy the unsold token.
Pillay also notes how the company and Mashinsky manipulated the price of their own CEL tokens, which efforts were not entirely successful. partly due to accounting defects
“Celsius has not received enough yield from deploying crypto assets to fund the CEL token buyback and consequently The company has therefore begun using Bitcoin (BTC) and Ether (ETH) deposited by customers to fund the purchase of CEL.”
Pillay noted that The action was “very Ponzi-like.” In addition, the company’s yield (interest rate) was not linked to the returns generated by the client’s assets. but is destined to beat competitors’ offers.
Between 2018 and June 30, 2022, the company paid out $1.36 billion more in rewards than the asset value of its revenue-generating clients.
In May 2022, as the price of LUNA (LUNA) Stablecoin plummeted, the company was no longer able to support the price of CEL. highly suspicious
“Between June 9th and June 12th, Celsius used new customer direct deposits to fund customer withdrawal requests.”
The investigator also noted Celsius Mining’s mining business, which was incorporated as a subsidiary in October 2020. “Celsius Mining’s outstanding utility bills are $13,982,152. Celsius Mining, however, has a total prepayment of $46,809,756, which may be used to offset Celsius Mining’s obligations.”
Pillay also found a “significant tax flaw,” which may not be surprising since Celsius doesn’t have a dedicated tax professional until June 2021. Still, it has not created a system to pay taxes and VAT in a timely manner.