Celsius’ $750 Million Insurance Being A Falsehood And Willful Deception Is Made
The cryptocurrency lending platform Celsius has been sued numerous times since it went bankrupt and caused enormous losses for investors, but that is only one aspect of its problems as a lawyer for those clients has accused Celsius of securities fraud.
Specifically, Dr. Jonathan Levy, whose clients have millions of dollars in assets bound in Celsius accounts, has referred to the Celsius insurance claims as a case of fraud related to offering unregulated securities, Finance Feeds reported on August 16.
As the attorney explained:
“The insurance does not exist. Celsius’ own term of use stated there was no insurance in the boilerplate print. Yet we have Celsius and GK8 claiming insurance in bold print. It is an intentional deception in aid of a billion-dollar securities offering.”
Disputed insurance claims – Celsius
On its website, Cels had previously stated that its assets were insured for $750 million. However, all references to insurance on the website inexplicably disappeared after the company filed for bankruptcy on July 13.
Furthermore, Cels claimed it had insurance through Fireblocks, but the compliance officer for the tech platform refuted this, saying that Fireblocks had nothing to do with the insurance or custody industry and that it only provided custody software to its customers.
The CEO of the cryptocurrency lender, Alex Mashinsky, has stated that the insurance was never integrated into Celsius’ operations, despite the fact that GK8, a subsidiary of Celsius, claims to have a $500 million insurance through AON (NYSE: AON). Additionally, Dr. Levy questioned the validity of these insurance claims.
Investigations and lawsuits keep piling up
Recall that the Celsius drama started in early June when the platform stopped allowing user withdrawals due to the extremely adverse market conditions that were present at the time and hampered liquidity. It announced to the public that it was striving to get things back to normal, but on July 13 it filed for bankruptcy.
As a result, the lender was the target of numerous lawsuits, including the one in which its previous employer accused it of operating a Ponzi scheme that resulted in the freezing of customer funds.
In a class action lawsuit filed in the U.S. state of New Jersey, it was claimed that Celsius made $10 billion through the sale of unregulated securities in a Ponzi scheme and persuaded investors to pay inflated prices for its financial goods.
Midway during the withdrawal freeze and prior to the bankruptcy filing, Canadian regulators opened an investigation into Celsius in an effort to shed light on what was going on behind the scenes.
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