Celsius inflated CEL’s price, helped insiders like CEO Mashinsky realize profits: Bankruptcy examiner

Celsius bankruptcy proceedings are no less surprising than FTX’s, as the unraveling of the case continues to surprise everyone. In line with the same, the United States appointed independent examiner’s report dictates that Celsius was involved in fraud.

Celsius manipulated the market

Celius had an explosive 24 months wherein the crypto company boomed during the Covid-19 pandemic lockdown. As customers on the platform grew, deposits did as well, and Celsius secured a solid customer base. 

This was all possible due to Celsius’ promise of rewarding the customers with CEL that they would buy in the secondary market. However, the buying spree that began in 2020 led to an increase in CEL price.

Since this increase in price was born out of Celsius fraudulently inflating the token, the company refrained from sharing this information with its customers. Consequently, according to former prosecutor and independent examiner, Shoba Pillay, this sowed the seeds of trouble for Celsius.

Going forward, according to the report, Celsius continued inflating the price by buying CEL using customer deposits, where the company spent nearly $558 million. In addition, the report states,

“The business model Celsius advertised and sold to its customers was not the business that Celsius actually operated. Behind the scenes, Celsius conducted its business in a starkly different manner than how it marketed itself to its customers in every key respect.”

Growing profits also dictated Celsius to return their customers with the promised rewards, which triggered Celsius’ downfall. Between 2018 and June 2022, Celsius’ obligations toward the customers grew to be worth more than $1.36 billion against a significantly lower net revenue generated.

This, in turn, benefit just those that had inside information about the cryptocurrency, including the likes of former CEO and founder, Alex Mashinsky. According to Pillay’s report, Mashinsky managed to churn profits after fraudulently inflating the price, earning up to $68.7 million from selling his CEL holdings.

Mashinsky under fire

The report came to light nearly a month after the former CEO of Alex Mashinsky was sued by the New York Attorney General, Letitia James. According to the filing, Mashinsky is said to have defrauded and misled its customers by hiding the company’s actual financial situation.

Through the lawsuit, James intends to seek a ban on Mashinsky from conducting any business in the state until the contract comes to an end. James is also looking to recoup the losses faced by investors.