Consumer complaint received 2022-08-01
Product: Money transfer, virtual currency, or money service — Virtual currency
Issue: Fraud or scam — 
Company: Celsius US Holding LLC (MD)

I have been unable to withdraw my crypto deposits since XX/XX/XXXX, which are worth in excess of {$110000.00} at today 's prices. I have attached my proof of funds. 

I want the courts, and regulators, to use all available avenues to recover as much of my funds as possible, investigate crimes that may have taken place, and have Celsius ' terms of service overturned as fraudulent. 

What's happened is fairly well reported by now, but here is my understanding. You can find this information on XXXX XXXX XXXX XXXX XXXX XXXX On XX/XX/XXXX, in a blog post entitled XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Celsius addressed rumors that the company had lost client funds by making poor investments and that it was facing a liquidity crisis. The company dismissed these rumors as the actions of " vocal actors spreading misinformation ''. The blog post denied claims that Celsius sustained significant losses as a result of thecollapse of XXXX the preceding month. 

On XX/XX/XXXX, during his weekly XXXX XXXX XXXX XXXX XXXX session on XXXX, XXXX XXXX, Celsius 's CEO, denied that Celsius was having problems with clients ' access to their funds and he suggested that its critics were being paid by competitors. XXXX said on the live stream, " Celsius has billions in liquidity, right, and we provide immediate access to everybody '' .Around this time, XXXX was questioning skeptical commenters on XXXX, accusing them of spreadingfear, uncertainty, and doubtabout Celsius. 

On XX/XX/XXXX, the company paused all customer withdrawals " in order to stabilize liquidity and operations '', citing " extreme market conditions. '' XXXX XXXX XXXX XXXX XXXX  That same day ( XX/XX/XXXX ), Celsius deleted a blog post that I had relied on to make my decision to invest my crypto with Celsius, entitled " Celsius Network is XXXX XXXX  XXXX XXXX. '' You can read this article here XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX In this article, Celsius describes how, unlike XXXX, you can withdraw your funds at any time, and they will never be frozen, and how their terms are different from XXXX 's. Yet, Celsius froze my funds for a month, BEFORE declaring bankruptcy. 

Unbeknownst to me, they had also changed their terms and conditions to be almost EXACTLY like the XXXX 's terms and conditions they railed against WITHOUT correcting the record ( and XXXX post, as I mentioned in my letter, was online through XX/XX/XXXX! ) Meanwhile, their XXXX XXXX XXXX continued to tell depositors that they were " safer than a bank. '' And in their post XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX' they claimed they were solvent and had the funds to meet withdrawal requsts. I relied on that post and to keep my money with Celsius. Clearly, that was a lie. 

XXXX XXXX  should not be able to conduct a standard XXXX XXXX XXXX with XXXX XXXX continuing as the CEO, as if this were a legitimate operation. 

Instead, their CEO, XXXX XXXX, needs to be investigated criminally, and clawbacks need to be expanded to management who misled investors and potentially to depositors who withdrew while the company was insolvent. 

There is emerging information that insolvency started a long time ago, perhaps last summer, particularly when accounting for the XXXX XXXX XXXX token and the company 's manipulation of it to paper over the balance sheet hole. 

Celsius and its CEO, XXXX XXXX, defrauded their customers through constant statements, including weekly XXXX 's XXXX XXXX XXXX XXXX XXXX  where statements directly contradicted reality. For examples, see : XXXX XXXX XXXXXXXX XXXX has tweets with concrete examples ; a recent tweet sums it up what's going on here ; " The difference between XXXX @ XXXX and XXXX XXXX XXXX At least XXXX was stating he was running a hedge fund, while XXXX said he was running safe crypto savings accounts earning yield through safe investments. # XXXX '' Celsius ' terms and conditions should be overturned as fraudulent because the CEO 's public statements consistently contradict the terms as written, and XXXX lied to his investors repeatedly. 

Celsius continued to solicit new deposits with full knowledge they were insolvent and could not survive a " run on the bank, '' up through the week when withdrawals were halted. Yet, XXXX had told customers in an XXXX that a " run on the bank '' was impossible because Celsius only engages in over-collateralized lending ( this was later shown to be a lie in their bankruptcy filing, where they were forced to reveal their true operation. ) In addition to the XXXX account I mentioned, you can find some of XXXX XXXX 's lies in the documenting-fraud channel here, and more are coming to light every day as people pour over his statements : XXXX XXXX XXXX  I believe Celsius was operating an illegal, unlicensed hedge fund through their so-called " earn '' and " borrow '' programs, which was billed as a " bank. '' Their rates were quite modest for most deposits, and they made us believe that they were doing over-secured loans to institutions to get these low yields ; really, they were gambling with our money. 

XXXX XXXX talked about Celsius as " safer than a bank '' constantly, and the company referred to itself as a bank that took " deposits '' and sent " withdrawals '' like a bank ; not a high-risk hedge fund that profits only him and shareholders, and where we bear the burden when the bets go wrong. 

This approach sort of worked in a bull market, though not really ( they made bad bets and lost more than they'd have made just holding the crypto ; a " hole '' appeared ; they tried to trade their way out and lost even more ... a classic Ponzi tale. ) Because the balance sheet was secret, and it's a private company, it didn't become exposed that there was a hole in Celsius ' balance sheet until they froze withdrawals during a " run on the bank '' ( which couldn't happen, according to XXXX, because all loans were over-collateralized. That was another lie. ) By then, it's clear the hole had long-since been there ; they'd been paying off new customers with old customers ' deposits for a very long time by the time they froze funds. 

They also partly papered over their hole on their balance with the " CEL '' token, which is a very low-liquidity token that the company manipulated to have a high market cap by hoarding most of the supply, so that they would appear to be less insolvent. This token was also used by XXXX and his wife to enrich themselves at the expense of depositors. And it is documented that XXXX XXXX, along with his wife, cashed out the token while telling customers to buy. This token was registered with the XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX A full investigation should be done into the crypto trading and losses ( to make sure funds weren't stolen, and also the CEL token, the employee program to buy and sell it, and the liquidity provisioning in particular, which the company controlled. ) It is my view, from what I know, that Celsius should be declared a Ponzi as of the date the company became insolvent, perhaps as early as the summer of XXXX A forensic analysis of all their operations needs to be conducted, to ensure they haven't stolen customer funds. 

Withdrawals after the insolvency date should be clawed back to even out the pain we all have to endure because they were using new customers ' funds to " pay off '' old customers who withdrew for a long time ; a classic Ponzi. In addition, I believe Celsius CEO XXXX XXXX committed fraud and other crimes and should be personally liable for the conduct that took place. 

All this said, I do not support a fire sale liquidation scenario, because that will just hurt customers more ; we are already hurting enough, and there are industry players offering better solutions than selling our crypto into a bear market to hedge funds and other vultures, such as XXXX XXXX and XXXX XXXX XXXX XXXX 

In addition, there is value in a lot of the company 's illiquid assets, such as mining, that require XXXX XXXX  and competitive bidding for a good outcome. What I am asking for is regulators to help customers get a good outcome from a bad situation, and that starts with getting XXXX XXXX removed as CEO. 

XXXX XXXX needs to be removed as CEO, and criminally investigated. The sooner someone competent who is not a scam artist and criminal can be appointed to run the company, and the more we can recover through clawbacks of fraudulent transfers, the more the creditors ' committee and the trustee can work to recover for depositors and re-organize the company under new management, with a new brand, into a properly regulated, compliant, and trustworthy entity. 

I will also add Celsius substantively implemented the settlement that XXXX made with the SEC. This settlement grandfathered non-accredited investors into the Earn program and made people think Celsius ' new " custody '' ( for non-grandfathered deposits ) was safe, and that the SEC had reviewed crypto lending platforms and at least allowed them to continue operations. But because Celsius didn't implement true custody, it is now a mess. I think this was with good intention, but unfortunately, it seems to have backfired. For one analysis of this issue, see XXXX XXXX XXXX XXXX I am happy to do more research and get you anything you need ; there are a huge number of depositors hurting. I encourage you to read the letter to XXXX XXXX here ; a lot of what you need to know is contained there : XXXX XXXX XXXX XXXX XXXXXXXX