An Irishman on the verge of losing his farm, an American with suicidal thoughts, an 84-year-old widow who has lost all her savings: the clients of the Celsius cryptocurrency investment platform are desperate.
Since the company filed for bankruptcy in mid-July, hundreds of letters from former users have come to court filled with anger, shame and often regret. ” I knew there were risks says, for example, a client who has not signed his testimony. ” It seemed worth it “.
Celsius was one of the main players in this sector, which lends money and earns interest on deposits, playing on the banks’ ground without offering the same guarantees. The platform offered interest rates above 18% for savers, but 0.1% for borrowers. It had 1.7 million customers in June.
But in light of the cryptocurrency plunge — bitcoin has lost more than 60% since November — several companies have frozen withdrawals and/or filed for U.S. bankruptcy.
“Betrayed, ashamed, depressed and angry”
” From the single mother from Texas who works hard and struggles to pay her bills, to the Indian school teacher who put her hard earned money on Celsius – I think I speak for everyone when I say that I feel betrayed, ashamed, depressed and angry “, wrote “EL”, a customer.
Celsius and its boss, Alex Mashinsky, had assured that the platform was a safe place to deposit its cryptocurrencies. It now owes $4.7 billion to its customers.
Their letters, which are available on the court’s public database, often tell of dramatic consequences, whether the loss amounts to hundreds or millions of dollars. They come from all over the world, from inexperienced crypto-enthusiasts to evangelists of these new assets. They almost all agree on one point: their trust has been betrayed.
” Alex Mashinsky completely lied to me “said one of those who define themselves as” a loyal customer of Celsius since 2019 “. ” Alex said Celsius was safer than banks “, he added.
One of the customers is an 84-year-old woman who decided to place her $30,000 in cryptocurrency savings on Celsius a month before the withdrawal stop.
“I collapsed on the ground, my head in my hands”
On June 7, Celsius again boasted ” having one of the best risk management teams in the world “. ” We’ve been through other crypto dips before (this is our fourth!). Celsius is ready “, the company stated. She claimed to have reserves to pay her obligations. Withdrawals worked normally.
But everything changed on June 12 when she announced the freeze. Without it, she then explains, the withdrawals would have been ” accelerated », allows « some customers – the first to shop – get a full refund, while others are left waiting “. It is a question, she promises, of restructuring to maximize value for all stakeholders “.
Some customers then receive a message from the company. ” When I finished reading the email, I collapsed on the floor with my head in my hands, trying to hold back my tears. says a man who had about $50,000 in assets stored in Celsius.
Clients who say they are hit harder, including one person who claims to have placed $525,000 borrowed from the government, say they contemplated suicide.
Others speak of stress, loss of sleep, and their deep shame at having risked their savings or their funds earmarked to pay for their children’s college.
No or few guarantees to customers
As a private company, in an unregulated industry, Celsius had few obligations to fulfill. ” The majority of these companies provided loans without collateral or with insufficient collateral says Antoni Trenchev, co-founder of Nexo, another crypto platform, which he says got away with a stricter lending policy and a ” prudent risk management “.
The victims hope that the court handling the bankruptcy process will help them recover at least some of their money. It can take years.
” I am of course sorry for all those who lost their money this way Don Coker, a legal expert in banking and finance, told AFP. But this is an area where they need to be aware of the risks “.