It appears that crypto lender Celsius Network used customer funds to pay for withdrawals.
This would imply that Celsius purposefully misled investors and utilised their funds to cover the withdrawals of other clients.
The news comes as a New York bankruptcy court is looking over Cesius’s case to determine if the crypto lender used Ponzi scheme tactics.
Celsius under fire for employing Ponzi scheme strategies
According to new sources, crypto lender Celsius used customer funds to pay for other people’s withdrawals. According to a New York bankruptcy court examiner, these acts are typical of Ponzi schemes.
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Prosecutor for the bankruptcy court Shoba Pillay has been investigating Celsius’s deeds before the company filed for bankruptcy. It seems that Celsius had lied to investors about the goings-on behind the scenes at the company.
According to Shoba Pillay:
In some instances, however, between June 9 and June 12, Celsius did directly use new customer deposits to fund customer withdrawal requests
According to an unidentified Celsius manager, the corporation squandered money that should have went towards executive pay on maintaining Celsius CEO Alex Mahinsky's CEL token net worth.
In addition, Celsius lied to the media about always having enough collateral to withstand rough periods in the market. According to Pillay, the claims on Celsius's collateral were "far off," and 14% of Celsius's institutional loans were unsecured.
Things aren’t looking too good for Celsius. In the background, there are thousands of deceived investors who were caught off guard by Celsius's bankruptcy and have had their funds frozen as a result of Celsius's bad debt.