An Irishman on the verge of losing his farm, an American with suicidal thoughts, an 84-year-old widow who has lost all her savings: clients of crypto investment platform Celsius are desperate.
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Since the company filed for bankruptcy in mid-July, hundreds of letters from former users have poured into the courts filled with anger, shame, and often regret.
“I knew there were risks,” says one client, for example, who did not sign his testimony. “It seemed like it was worth it.”
Celsius was one of the most important players in this sector, which lends money and remunerates deposits, playing in the field of banks without offering the same guarantees.
The platform offered interest rates above 18% for savers, but 0.1% for borrowers. It had 1.7 million customers in June.
But in the face of the cryptocurrency crash (Bitcoin has lost more than 60% since November), several companies have frozen withdrawals and/or filed for bankruptcy in the US.
“From the hard-working single mom in Texas who struggles to pay her bills, to the Indian school teacher who had put her hard-earned money into Celsius: I think I speak for everyone when I say I feel betrayed, ashamed , depressed and angry. ”, wrote “EL”, a client.
Celsius and his boss, Alex Mashinsky, had ensured that the platform was a safe place to deposit their cryptocurrencies. Now he owes $4.7 billion to his clients.
His letters, accessible on the court’s public database, often recount dramatic consequences, whether the loss runs into the hundreds or millions of dollars.
They come from all over the world, from inexperienced crypto enthusiasts to evangelists for these new assets. Almost everyone agrees on one point: their trust has been betrayed.
“Alex Mashinsky completely lied to me,” said one, who calls himself “a loyal Celsius customer since 2019.” “Alex said Celsius was safer than banks,” he added.
On June 7, Celsius boasted “of having one of the best risk management teams in the world.”
“We have been through other crypto declines before (this is the fourth!). Celsius is ready,” the firm said.
He claimed to have the reserves to pay his obligations. Withdrawals were running normally.
But everything changed on June 12, when he announced the freeze.
Without it, he explains then, withdrawals would have been “accelerated”, allowing “some customers, the first to act, to be fully refunded, leaving others waiting”.
It is, he promises, restructuring to “maximize value for all stakeholders.”
Some customers receive a message from the company.
“When I finished reading the email, I collapsed on the floor, my head in my hands, trying to hold back my tears,” said a man who had around $50,000 in assets stored at Celsius.
stress and shame
Clients who say they are the hardest hit, including one individual who claims to have put up $525,000 on government loans, say they considered suicide.
Others speak of stress, lack of sleep, and their deep embarrassment at having risked their savings or set aside funds to pay for their children’s college.
As a private company, in an unregulated sector, Celsius had few obligations to meet.
“Most of these companies made unsecured or under-collateralized loans,” says Antoni Trenchev, co-founder of Nexo, another crypto platform that he says got away with a stricter lending policy and “prudent management of the loan.” risk”.
One of the clients is an 84-year-old woman who decided to put her $30,000 in saved crypto into Celsius a month before the withdrawal freeze.
Victims hope that the court that handles the bankruptcy process will help them recover at least some of their money. It could take years.
“Obviously I feel sorry for anyone who has lost their funds in this way,” Don Coker, a legal expert in banking and finance, told AFP. “But this is an area where they need to be aware of the risks.”
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