The Financial Freefall of Celsius
In a twist befitting a drama, a recent interim report from independent examiner Shoba Pillay has shone a spotlight on the chaos behind Celsius, the notorious crypto lender now tangled in bankruptcy proceedings. It turns out the company’s governance over customer funds was about as loose as your uncle’s grip on the karaoke mic after a few too many drinks at the holiday party.
Pillay’s Findings: Where’s the Accountability?
Pillay’s report blasts Celsius for launching its Custody program with all the planning of someone whipping up a dinner party at the last minute. The initiative rolled out on April 15 without any “sufficient accounting and operational controls,” leaving customers’ cars parked haphazardly in the garage when they should’ve been safely tucked away. Instead of keeping track of assets, they mingled them all together like a toddler’s toy box.
The Commingling Catastrophe
There was no effort to segregate assets linked with Withhold accounts from those in the main wallets—definitely not the best decision for a company entrusted with managing people’s hard-earned investments. As a result, Pillay notes, customers are now caught in the uncertainty of which assets they might still own post-bankruptcy filing, pointing at the mess like a 1950s horror movie survivor who just realized the monster is still lurking.
Withdrawal Woes: The Breaking Point
Peering further into the labyrinth of Celsius’ woes, it becomes clear that the breaking point came around June 11, when customers’ Custody wallets were found to be underfunded. Fast forward to June 24, and those wallets were down a whopping 24% to $50.5 million, leading to a dramatic halt in withdrawals on June 12, leaving many users gasping for cash like fish flopping out of water.
A Ticking Clock for Customers
As if the drama couldn’t amp up further, Celsius has set a deadline for customers to file claims against the company by January 3, 2023. If you want a shot at recovering your dough, you better act fast! However, if you nod in agreement with Celsius’ scheduling, you can skip the proof of claim paperwork, which is either a small mercy or another head-scratcher in this already baffling saga.
The Regulatory Push: A Tough Learning Curve
Pressure from the New Jersey Bureau of Securities ignited a fire under Celsius to create new programs on short notice, as it became apparent that the “Earn” accounts were under the watchful eye of legal scrutiny. In the wake of this, it appears that the company didn’t even start tracking its balance sheet until regulators had knocked on the door—because who needs proper records when you can just use Google Sheets, right?
The Collapse of Terra: A Perfect Storm
The vicious collapse of the Terra ecosystem, which saw a catastrophic 98% drop in value for its coins, was a significant factor leading to Celsius’ downfall in May. As if the monetary landscape wasn’t shaky enough, this financial earthquake only intensified the woes surrounding Celsius. With the next court date looming on December 5, discussions on Custody and Withhold accounts will be front and center, and all eyes will be glued to see if Celsius can salvage any wreckage from this shipwreck.
