The Celsius Network PONZI SCHEME (They Stole BILLIONS) | Celsius Fraud Documentary
It’s become incredibly clear that the bankrupt crypto lending company Celsius was a giant fraud and was essentially running a massive Ponzi scheme with billions of dollars in customer deposits. The company’s former CEO, Alex Mashinsky, was arrested on 7 different charges including securities fraud, commodities fraud, and wire fraud. And as you’ll soon see, Mashinsky consistently lied through his teeth to Celsius customers about nearly every aspect of the business.
But in order to understand how the Celsius fraud worked, you need to first know the basics about Celsius’ business pitch to customers. They said that if you deposited your crypto on Celsius, they would use your crypto to make profitable loans, and in exchange they would use the returns they got from those loans to pay you high interest on your crypto deposits: And when I say high interest, I mean it: they were offering interest yields as high as 17% which is insane. This was massive interest compared to banks which were offering yields of less than 1% at the time.
So they were also very clearly claiming that they were specifically paying 80% of their total revenue back to customers and keeping the remaining 20% for themselves as the company’s cut. This detail will be important when we look at the SEC’s lawsuit.
So essentially Mashinsky would claim that the reason Celsius could afford to pay these higher rates to customers was simply because it was passing along more of its earnings than banks were willing to. He was so brazen about this assertion that he even claimed in an interview that “Somebody is lying,” “Either the bank is lying or Celsius is lying.” And guess what, Celsius and Mashisnky were totally the ones lying here. Shocker.
The SEC lawsuit claims that Celsius wasn’t paying customers just 80% of its revenue, they were actually paying customers much more than that. You see, the numbers simply didn’t add up. Even with paying customers 80% of the total revenue Celsius was getting from the loans it was making, this wasn’t enough to be able to afford to pay customers 17% interest on their crypto. So in order to be able to pay customers the high interest rates they owed them, Celsius would frequently have to pay over 100% of the revenue they were bringing in. In fact, during the full 2021 year, Celsius paid 23% more in interest to its customers than it actually generated in revenue.
So you might be asking the million dollar question now: how was Celsius actually managing to pay more money to its customers than the business was making? If you answered that they were running a ponzi scheme, you’d be right. Celsius executives explicitly said internally that they were essentially using user balances to pay user rewards. In other words, they were using the new money that they would get from customers making new deposits to pay out the interest for existing customers. That’s a textbook ponzi scheme.
The SEC lawsuit also claims that Celsius deliberately manipulated and artificially increased the price of CEL tokens in order to bolster their own balance sheet.
So in 2020, Celsius began to secretly manipulate the price of CEL higher through buybacks that were not disclosed to the public. But worst of all, Mashinsky himself directly used this price manipulation to grow his wealth. As the second largest owner of CEL behind only Celsius itself, his own personal wealth skyrocketed as CEL’s price was manipulated higher. And Mashinsky used this manipulation to essentially run a pump and dump scheme on retail investors. While he was publicly telling Celsius customers that he was only buying CEL and telling them to hold on to their own CEL, he was in fact selling millions of dollars worth of CEL to unsuspecting retail investors. And right before Celsius froze withdrawals and declared chapter 11 bankruptcy, Mashkinsky and other company executives withdrew nearly all of their crypto from the platform even as they were telling Celsius’ retail customers that everything was fine and they had plenty of liquidity.
Of course this was all a lie to help them get their money out before the entire company failed and declared bankruptcy. Unfortunately Celsius’ customers still have their funds trapped as the company is going through bankruptcy proceedings. And even worse, the company has a $1.2 billion dollar deficit meaning that customers will likely not be getting all of their money back.
Celsius is without a doubt one of the biggest ponzi schemes to date in the cryptocurrency space – which is saying something as crypto is infamous for being filled with widespread fraud, scams, and corruption.
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