Celsius filed for Chapter 11 bankruptcy protection late Wednesday, leaving users wondering if they’ll ever again see the money they put into the crypto platform. Unfortunately for the average user, they’ll have to wait in line with the company’s other creditors, something that was made explicit in the platform’s incredibly shady terms of service.
Celsius, which allowed people to buy and sell cryptocurrencies like its native token, also called Celsius, gained attention for offering as much as 18% interest on crypto—an absurdly large return for any asset. The company first paused withdrawals for its 1.7 million users on June 12 but assured people they could still “accrue rewards” during the pause.
But whatever “rewards” were accrued in the past month is imaginary money at this point, as Celsius customers will likely have a hard time seeing any of their regular money coming back, let alone the supposed “interest” earned on that crypto. Celsius, for its part, is still trying to put on a happy face about all of this even through bankruptcy.
“These Chapter 11 cases provide the Company with the best opportunity to stabilize the business, consummate a comprehensive restructuring transaction that maximizes value for all stakeholders, and emerge from Chapter 11 positioned for success in the cryptocurrency industry,” Celsius said in an email to users overnight.
“We apologize that communication with our teams and community has been very limited over the past few weeks, and we look forward to being able to offer greater transparency with everyone through our reorganization, which encourages dialogue with all stakeholders,” Celsius continued.
The Celsius token has lost 79% of its value in the past six months, though desperate users have spent the past month trying a “short squeeze” by buying up as much Celsius crypto as they can in the hopes of inflating the price. That effort has been little more than doubling down on failure, essentially handing more money to the people who started the crypto Ponzi scheme in the first place and letting them cash out.
Celsius bought a large amount of its own token since July 2019—roughly $350 million worth, according to the Financial Times—but the founders of the company were selling like crazy in the past few years. Celsius co-founder and CEO Alex Mashinsky allegedly made some particularly large sales, despite swearing publicly that Celsius execs didn’t sell the token.
Based on public blockchain data, it’s estimated Mashinsky sold roughly $44 million worth of Celsius crypto over the years, according to the Financial Times. Mashinsky did not immediately respond to a request for comment early Thursday.
Celsius published a YouTube video explaining what it’s doing by seeking bankruptcy protection and even gave a rather rosy outlook by noting all the other companies that have filed for bankruptcy and emerged just fine. And, yes, companies like General Motors and Marvel have filed for bankruptcy and bounced back, but those companies actually produce something. As a crypto trading platform, Celsius didn’t create a product. It took money from customers and kept hold of their digital Monopoly money for them. Then the market for crypto tanked and that digital Monopoly money was worth a lot less. In some cases, coins became totally worthless.
Curiously, Celsius seems to have deleted a video that was previously available on YouTube and published in April of this year, titled, “Why Choose Celsius?” That video included influencers who were pledging up and down that the benefit of Celsius was its wonderful transparency.
Messages on social media from users of the platform are heartbreaking, with people explaining they really need the money that’s tied up in Celsius’s bank accounts. But at this point it’s not clear how much money there is left.
“I’m a single father, I need my BTC,” one user wrote, using the symbol for bitcoin.
“To fellow depositors: Do i understand correctly that there is literally NOTHING/NO ACTION we as depositors can take now? Just have to wait and see if they give us money back? If so, anywhere we should be keeping eyes on?” another user wrote.
“I’m a single mother. This will change the path of my life. I feel sick,” yet another user wrote.
Celsius is just one of several crypto companies that have collapsed in the past few months, with cryptocurrency prices in the toilet. Luna, once the fourth largest coin in the world, plunged to nothing in the span of just a few days back in May. What did the people behind Luna do? They just started a new coin called Luna 2.0. Needless to say, Gizmodo does not recommend investing in Luna 2.0.
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