key takeaways
- Timothy Cradle, former Director of Financial Crimes Compliance at Celsius, has accused the lender of deliberately manipulating the price of the CEL token.
- Jason Stone, the head of a firm that manages more than $2 billion for Celsius, separately accused the lender of price manipulation in a lawsuit filed on July 7.
- According to its bankruptcy filing, Celsius has a $1.19 billion hole in its balance sheet and owes $4.72 billion to its customers, but its terms of use mean they may never get their money back.
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The former Director of Financial Crimes Compliance at Celsius told CNBC That the beleaguered lender was dealing with several internal failures years before it filed for Chapter 11 bankruptcy.
Celsius faces allegations of market manipulation
One of the company’s former executives has claimed that Celsius intentionally manipulated the price of its CEL token.
in a tuesday CNBC In the interview, Timothy Cradle, the former Director of Financial Crimes Compliance at Celsius, said that he heard other company executives discussing “pumping CEL tokens” at a corporate Christmas party in 2019. According to Cradle, the officers spoke openly about their activities, and they said similar conversations occurred on at least two other occasions. “I don’t know a better way to phrase it, but they were in the market; they were actively trading and driving up prices. [CEL] token,” Cradle said in the interview. “They were trading tokens purely to manipulate the price.”
Cradle isn’t the only person familiar with the lender’s operations to accuse the company of engaging in potentially illegal market manipulation. Earlier this month, Jason Stone, the head of KeyFi, a firm that manages more than $2 billion in crypto assets on behalf of Celsius, sued Celsius, alleging that the firm was not using KeyFi for its services. Failed to make payment. In the lawsuit, Stone said the lender engaged in a number of harmful and illegal business practices, including market manipulation, running a Ponzi scheme and failing to implement basic accounting controls or risk management practices.
“The most striking example of this was the plaintiff’s discovery that Celsius used customer bitcoin deposits to increase his crypto-asset called the ‘Celsius Token’,” the lawsuit read. Stone accused the lender of taking advantage of double-digit interest rates on its deposit accounts to “woo new depositors” and using those funds to pay off earlier depositors and creditors, effectively running a Ponzi scheme.
Craig’s allegations come days after Celsius filed for Chapter 11 bankruptcy in New York. That filing showed there was a $1.19 billion hole in the lender’s balance sheet. In addition, documents show that Celsius owes its customers $4.72 billion. Unfortunately for them, the lender’s terms of use state that customers transfer ownership of their coins to the lender and may be treated as unsecured creditors in the event of liquidation. In other words, there is a good chance that the firm’s clients will never see their funds again.
Disclosure: At the time of writing, the author of this article owns ETH and several other cryptocurrencies.