Celsius Accused of Running Ponzi Scheme, Using New Customer Funds to Pay for Withdrawals

Shoba Pillay, an independent examiner for the New York bankruptcy court, said in a filing today that Celsius used new customer funds to pay for other customers' withdrawals on occasions.

"In every key respect—from how Celsius described its contract with its customers to the risks it took with their crypto assets—how Celsius ran its business differed significantly from what Celsius told its customers," Pillay said, adding that Celsius' Coin Deployment Specialist Dean Tappen described the company's practices as "very ponzi like" in April 2022.

According to Pillay, between June 9th and June 12th 2022, Celsius did directly use new customer deposits to fund customer withdrawal requests. On June 12th, Celsius suspended withdrawals.

In addition, Pillay said that Celsius' former CEO Alex Mashinsky's claims to the media and on social media to "always have 200% collateral" were not true, with 14% of Celsius' institutional loans wholly unsecured.

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