Crypto: The CEO of Bankrupt Celsius Requests Help from Elon Musk

Crypto: The CEO of Bankrupt Celsius Requests Help from Elon Musk

12 December 2022

Celsius Network was one of the leading cryptocurrency organizations that declared bankruptcy last summer due to a liquidity crisis in the fledgling blockchain-powered financial-services industry.

The cryptocurrency lender was also one of the first to suspend client withdrawals in mid-June before declaring for Chapter 11 bankruptcy a little more than a month later.

The business continued by claiming that it was a collateral victim of the collapse of sibling cryptocurrencies Luna and UST or TerraUSD. These two tokens had collapsed as a result of a bank run, which hurt all corporations exposed to them, including the hedge fund Three Arrows Capital.

Three Arrows Capital, or 3AC, received significant amounts of money from many cryptocurrency lenders, such as Celsius and Voyager Digital, to invest. When the hedge fund was forced to liquidate, all of its clients paid a high price.

Celsius operated as a bank in the cryptocurrency universe. It was essentially an organization that worked as an intermediary between various participants.

Its business model was to lend – to hedge funds and other institutional investors – in cryptocurrencies of its clients, to whom it promised significant high returns. It promised 18 percent interest rates to clients who deposited their cryptocurrencies. This is much higher than what traditional savings accounts offer.

Celsius Owes Customers $4.7 Billion.

These promises helped Celsius, created in 2017, accumulate more than $20 billion in assets in five years.

Founder and CEO Alex Mashinsky claimed that the company’s concept might not be sustainable over time, as critics claimed.

The organization was accused of running a Ponzi scam in a complaint filed by one of its money managers, Jason Stone of KeyFi. It refuted the allegations.

“Do you know someone who has trouble withdrawing from Celsius?” On June 11, Mashinsky questioned a Twitter user. Celsius said the next day that it was suspending customer withdrawals and other operations due to “extreme market circumstances.”

Celsius disclosed in June that it owes roughly $4.7 billion in cryptocurrency to its clients. According to bankruptcy records, the lender had 1.7 million clients, including 300,000 with accounts worth more than $100.

Retail investors who seek to reclaim part of their money have put pressure on the company. These investors are banding together on social media in order to push the Securities and Exchange Commission or/and the Federal Trade Commission, both of whom are tasked with protecting consumers, to open investigations into Celsius.

And this campaign has gone nasty, according to Mashinsky, who recently stated on Twitter that his family had received threats. He doesn’t get into specifics.

But he asked for help from Elon Musk, the new owner of Twitter. He requested that the billionaire intervene since the threats would have been posted on the social media platform.

“Hi @elonmusk, please take action against users who have been threatening my family with physical violence for the past six months,” Mashinsky tweeted at Musk on December 7. “Also, the influencers who have been flaming the fire with unsubstantiated accusations while soliciting the same angry people to sign up for their service.”

Crypto: The CEO of Bankrupt Celsius Requests Help from Elon Musk

Total Abuse

Mashinsky’s request is followed by tweets from his wife, who claims strangers have endangered the couple’s children.

Krissy Mashinsky reported the threats to Twitter and received a response indicating that the accounts in issue had not broken any of the platform’s rules.

However, if one clicks on the links in one of her messages, the communications she refers to are no longer available. Instead, a notification is shown that states, “This Tweet violates the Twitter Rules.”

“Roxas, no point in deleting. Is SouthWestern Australia treating you nicely? Look up🛰️Don’t you ever threaten my kids again. Reviewing your account now. @waybackmachine @Twitter

Two days later, Krissy Mashinsky posted the following message:

“As one parent to another & now that you are in charge @elonmusk, please review this response re: the public threats made against my children on Twitter. Specifically this one. Thank you. @TwitterSupport,” She added.

Mashinsky resigned as CEO on September 27th, citing personal reasons, “a detriment” to the business he started. That firm was previously valued at $3 billion and is now bankrupt.

“Please accept my resignation as CEO of Celsius Network Ltd, as well as my directorships and other roles at each of its direct and indirect subsidiaries, effective immediately,” he stated in a resignation letter.

In the letter, he also added that he regrets that his prolonged work as CEO has been an increasing distraction, and he really regrets the challenging financial conditions that members of his community are experiencing.

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