After Celsius’ meltdown, crypto clients plead for their money

People caught up in the implosion of cryptocurrency lender Celsius are appealing for their money to be returned.
Hundreds of letters have been sent to the judge managing the firm’s multibillion-dollar bankruptcy, filled with rage, embarrassment, despair, and, on occasion, regret.

“I was aware of the risks,” claimed a client whose letter was not signed. “It appeared to be a worthwhile risk.”

Celsius and its CEO, Alex Mashinsky, marketed the platform as a secure place for consumers to store their cryptocurrencies in exchange for high interest. At the same time, the company lent out and invested in those deposits.

However, when the value of highly volatile cryptocurrencies plunged — bitcoin alone has lost more than 60% since November — the firm faced escalating difficulties, eventually freezing withdrawals in mid-June.

According to a court filing earlier this month, the firm owed its subscribers $4.7 billion, and the endgame remains unknown.

The letters, submitted to a public online court docket, come from around the world and detail the sad consequences of customers’ money being frozen.

“From that hardworking single mom in Texas struggling with past-due bills to the teacher in India with all his hard-earned money deposited in Celsius — I believe I can speak for the majority of us when I say I feel betrayed, ashamed, depressed, and angry,” wrote one client who signed their letter EL.

While the letters’ levels of sophistication in the crypto realm range from self-proclaimed amateurs to all-in evangelists, and the economic impacts range from a few hundred dollars to seven-figure sums, nearly all agree on one point.

“I have been a faithful Celsius customer since 2019 and feel deceived by Alex Mashinsky,” stated a client who requested anonymity to preserve his privacy.

“Alex would discuss how Celsius is more secure than banks.”

Many of the letters cite the CEO’s AMA (Ask Mashinsky Anything) online conversations as a crucial factor in their trust in him and the platform, which appeared to be stable until only days before it froze users’ funds.

Promises before the fall

“Celsius boasts one of the world’s best risk management teams.” “Our security personnel and infrastructure are unparalleled,” the company remarked on June 7.

“We have survived previous crypto downturns (this is our fourth!). “Celsius is ready,” the company declared.

The notice also stated that the corporation had sufficient reserves to meet its obligations and that withdrawals were being processed as usual.

The impact was noted by one client who claimed to have $32,000 in bitcoin locked up at Celsius.

“The retail investor received assurance up until the end,” the client wrote to the judge.

But things rapidly changed, and Celsius announced the freeze on June 12: “We are taking this move now to put Celsius in a stronger position to honor its withdrawal obligations over time.” The news was delivered to specific clients via business communication.

“By the time I finished the e-mail, I had dropped onto the floor with my head in my hands, and I fought back the tears,” one individual with around $50,000 in assets with Celsius wrote.

Clients who stated they were severely hit, including one who said he put $525,000 from a government loan on Celsius, said they had considered suicide.

Others experienced intense worry, lack of sleep, and feelings of deep humiliation for investing their retirement funds or their children’s education funds in a considerably riskier platform than they realized.

The Washington Post defined the situation as “an unregulated private corporation, Celsius does not come under any requirement for disclosure.”

Celsius did not respond to an inquiry about the clients’ letters.

The bankruptcy proceedings are their only hope for people like an 84-year-old woman who only had about $30,000 in crypto funds on Celsius for a month.

“It’s not uncommon for someone to come out of something like this with zero,” said Don Coker, a banking and finance expert witness.

“Obviously, I feel bad for anyone who loses an investment like this, but it’s just something they need to be aware of,” he said.