According to Financial Times, Alex Mashinsky, the embattled founder and former CEO of Celsius Network, withdrew $10 Million before pausing withdrawals and filing for bankruptcy.
Celsius, one of the first major crypto institutions, experienced the effects of the crypto crash due to the slide of the stablecoin Terra and its sister cryptocurrency Luna.
Celsius, a crypto lender that marketed its high yields, assured clients that there were no issues and froze customer accounts when rumors of insolvency began to spread.
A spokesperson for Mashinsky confirmed their withdrawal from the Financial Times but ensured that they still have $44 million in crypto assets.
While it may work well in the short-run, withdrawal before they stopped their service is questionable. And that’s not the only problem with Celsius.
There has been much talk about whether Celsius resembles a Ponzi scheme, and now the Vermont Department of Financial Regulation is alleging they have the same qualities.
In a filing on Celsius’ bankruptcy, the agency remarks that “this shows a high level of financial mismanagement and also suggests that, at least at some points in time, yields to existing investors were probably being paid with the assets of new investors.”
Paying out existing investors with the funds coming in from new investors…is a Ponzi scheme.
Crypto companies like Celsius promote themselves as benefitting the little guy, but that is not true. They freeze user accounts and such a thing happened to Mashinsky, a notable crypto entrepreneur.
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