Crypto Customers Beg For Money Back After Lender Crash
Washington (AFP) – An Irishman at risk of losing his farm. An American with suicidal thoughts. An 84-year-old widow’s lost savings: Those caught up in the collapse of crypto lender Celsius demand their money back.
Hundreds of letters have been sent to the judge in charge of the company’s multi-billion dollar bankruptcy and they are fraught with anger, shame, despair and, often, regret.
“I knew there were risks,” said a client whose letter was unsigned. “It seemed like a worthwhile risk.”
Celsius and its CEO Alex Mashinsky had touted the platform as a safe place where people could deposit their cryptocurrencies in exchange for high interest, while the company lends and invests those deposits.
But as the value of highly volatile cryptocurrencies plummeted – bitcoin alone has lost more than 60% since November – the company faced growing problems until it froze withdrawals at mid-June.
The company owed users $4.7 billion, according to a filing earlier this month, and the endgame is unclear.
The letters – posted to a public online court registry – come from around the world and recount the tragic results of the freezing of users’ money.
“From that working single mother in Texas struggling with unpaid bills, to the teacher in India with all her hard-earned cash deposited in degrees Celsius – I believe I can speak for most of us when I say I feel betrayed, ashamed, depressed, angry, ”wrote a client who signed his letter EL
While the letters vary in their level of sophistication on the crypto world — from self-confessed newbies to all-in-one evangelists — and monetary impacts range from a few hundred dollars to seven-figure sums, nearly all are d agree on one thing.
“I have been a loyal customer of Celsius since 2019 and I feel completely lied to Alex Mashinsky,” wrote a customer who AFP does not identify to protect his privacy. “Alex was talking about Celsius being safer than banks.”
Numerous letters indicate that the CEO’s AMA (Ask Mashinsky Anything) online chats are key to their confidence in him and the platform, which presented itself as stable until a few days before freezing the funds of the users.
Repeated assurances before the fall
“Celsius has one of the best risk management teams in the world. Our team and security infrastructure are second to none,” the company wrote on June 7.
“We’ve been through crypto downturns before (this is our fourth!). Celsius is ready,” the company wrote.
The post also said the company had the necessary reserves to pay its obligations and that withdrawals were being processed as normal.
One client, who said he had $32,000 in crypto locked away at Celsius, noted the impact.
“Until the end, the retail investor received insurance,” the client wrote to the judge.
But that changed quickly and on June 12, Celsius announced the freeze: “We are taking this step today to put Celsius in a better position to meet, over time, its withdrawal obligations.”
Some customers learned the news in a message from the company.
“By the time I finished the email, I had collapsed on the floor with my head in my hands and fought back tears,” wrote a man who had about $50,000 in assets. at Celsius.
Clients who said they were hit hardest, including a man who said he placed $525,000 he got from a government loan on Celsius, revealed they had considered suicide.
Others reported intense stress, lack of sleep and a sense of deep shame that they had placed their retirement savings or their children’s education money on a much riskier platform than they thought.
“As a private, unregulated company, Celsius is not subject to any disclosure obligations,” is how the Washington Post summed up the situation.
Celsius did not respond to a request for comment on the customer letters.
For people like an 84-year-old woman, who only had around $30,000 in crypto savings on Celsius for a month, their hope lies in the bankruptcy proceedings.
“It’s just not unusual for people to come out of something like this with zero,” said banking and finance expert witness Don Coker.
“Obviously I feel sorry for anyone who loses an investment like this, but it’s just something they need to be aware of the risks,” he said.
© 2022 AFP