US Bankruptcy Judge Martin Glenn, overseeing Celsius’s Chapter 11 case appointer ex-prosecutor Shoba Pillay as the examiner to probe the crypto lending platform. The examiner was expected to release a report on the customer’s allegation of Celsius operating a Ponzi scheme.
Celsius Running Ponzi Schemes?
As per reports, the bankruptcy examiner found out that the business model that Celsius Network sold and advertised to its customers was completely different from what the firm was operating. It mentioned that from the beginning, Alex Mashinsky, Celsius founder did not deliver the assurances they gave around its native CEL token. However, it also involved other business activities.
This report is expected to add more pressure on Alex Mashinsky who is already facing fraud allegations. As per the report, the Celsius stablecoin registered a shortfall of around $1 billion from May 28, 2021, to its bankruptcy filings.
However, the bankrupt crypto lending firm hasn’t responded to the allegations yet. Meanwhile, new jersey based firm filled for a Chapter 11 court proceeding back in July 2023. Celsius froze its customer withdrawals from the platform before filing for bankruptcy. Reports suggest that the firm listed a deficit of $1.19 billion on its balance sheet.
The troubled crypto lender made it to the headlines after registering a boom during the COVID-19 pandemic. The lender successfully delivered a high-interest rates with easy access of loans to the users.