Crypto lender bankrupt, clients demand money back

Crypto currencies have the same risk as real cash

July 31, 2022

WASHINGTON (AFP) — People caught in the meltdown of crypto lender Celsius are pleading for their money back.

Hundreds of letters have poured in to the judge overseeing the firm’s multi-billion-dollar bankruptcy and they are heavy with anger, shame, desperation and, frequently, regret.

“I knew there were risks,” a client whose letter was unsigned said. “It seemed a worthwhile risk.”

Celsius and its CEO Alex Mashinsky had billed the platform as a safe place for people to deposit their crypto currencies in exchange for high interest, while the firm lent out and invested those deposits.

But as the value of highly volatile crypto currencies plummeted — bitcoin alone has shed over 60 percent since November — the firm faced mounting troubles until it froze withdrawals in mid-June.

The company owed $4.7 billion to its users, according to a court filing earlier this month, and the endgame is unclear.

The letters — posted to a public online court docket come from around the world and recount tragic results of users’ money being frozen.

“From that hard-working 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 most of us when I say I feel betrayed, ashamed, depressed, angry,” wrote one client who signed their letter E.L.

“I have been a loyal Celsius customer since 2019 and feel completely lied to Alex Mashinsky,” wrote a client who AFP is not identifying to protect his privacy. “Alex would talk about how Celsius is safer than banks.”

Repeated assurances before fall

“Celsius has one of the best risk management teams in the world. Our security team and infrastructure is second to none,” the firm wrote on 7 June.

“We have made it through crypto downturns before (this is our fourth!). Celsius is prepared,” the firm wrote.

The message also said the company had the reserves to pay its obligations, and withdrawals were being processed as normal.

One client, who reported having $32,000 in crypto locked up at Celsius, noted the impact.

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

But that changed quickly, and on 12 June Celsius announced the freeze: “We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations.”

Some clients got the news in a message from the company.

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

The clients who said they were hardest hit, including a man who said he placed $525,000 he got from a government loan on Celsius, disclosed they had considered killing themselves.


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