In line with the collapse of Terra, the Celsius platform had also yielded last summer. Since its declaration of bankruptcy, Celsius is the subject of an investigation to understand the reasons for the bankruptcy. The judge in charge of the case has just requested the opening of an additional investigation. The goal? Determine if Celsius was not a Ponzi. An element that could prove extremely important, especially for former leaders of the crypto platform.
The judge opens an investigation following the allegations of customers!
This investigation echoes yesterday’s hearing where some clients claimed that Celsius was using the assets of new users to pay for the returns of older users. A scheme which, if it turns out to be true, would fit perfectly with the definition of a Ponzi scheme.
In the coming weeks, a team will be formed to investigate this possibility. The judge in charge of the Celsius case has also just ordered the Celsius creditors’ committee to choose the leader of this investigation, according to information shared by the Wall Street Journal. Last September, the federal judge in charge of the case had already approved the appointment of an examiner for an independent investigation. This first component was to provide more transparency, particularly on the entity’s digital assets, but also the modification of user accounts in April 2022.
Good to know : A Ponzi system is characterized in the first place by the remuneration of the investments of the first entrants by the contribution of liquidities of new entrants. The system perpetuates itself until it is discovered and/or until new entrants’ cash can no longer cover early entrants’ gains.
Celsius already charged in the past!
For the bankrupt company, the accusation of being a Ponzi is not a first. Shortly before the bankruptcy of the ecosystem, the DeFi KeyFi protocol was already making the same accusations. KeyFi had also sued Celsius on July 7 according to this grievance.
If this accusation were to be admitted, it could be a game-changer for those responsible for the fallen platform. Indeed, they could be prosecuted for setting up a fraudulent financial arrangement. The legal consequences of such a requalification could therefore be disastrous for the former managers of the structure.
It should also be remembered that Celsius, which has been placed under an employee retention plan, still owes more than 3 million dollars to some sixty former employees. An element that Martin Glenn insisted on recalling during yesterday’s hearing.