Well, that tweet didn’t age well.
On June 11, Alex Mashinsky, co-founder and CEO of the cryptocurrency lending platform Celsius, asked, “do you know even one person who has a problem withdrawing from Celsius?”
‘Why Spread FUD’
“Why spread FUD”–crypto speak for fear, uncertainty and doubt — “and misinformation.”
On June 12 — one day later — the FUD started flying all over town as Celsius Network “made the difficult but necessary decision” to pause withdrawals from its deposit base due to “extreme market conditions.”
Those conditions included bitcoin prices nosediving below the lowest levels since December 2020, as surging interest rates reduced demand for the world’s biggest cryptocurrency.
And on July 13, the battered company said it had filed for bankruptcy.
“Moments ago, @CelsiusNetwork filed voluntary petitions for Chapter 11 protection and announced that the company initiated a financial restructuring,” the company tweeted.
Celsius filed for bankruptcy under Chapter 11 in U.S. Bankruptcy Court for the Southern District of New York, stating it has $167 million in assets on hand to fund operations during restructuring.
Chapter 11 allows companies to restructure their financial obligations while operations continue.
“This decision was made with the intention to provide the best opportunity to stabilize the business, consummate a comprehensive restructuring transaction that maximizes value for all stakeholders, and emerge from Chapter 11 positioned for success in the crypto industry,” Celsius said in a follow up tweet.
‘Transparent Process’
The company said that “acting in the best interest of our stakeholders, including our entire customer community, is our top priority.”
“We look forward to sharing our progress as we go through this transparent process,” Celsius tweeted.
One day before Celsius announced its bankruptcy, the Vermont Department of Financial Regulation had encouraged investors to “proceed with caution” when it came to Celsius, as it was believed to be deeply insolvent and didn’t have the assets or liquidity to honor its obligations.
“Due to its failure to register its interest accounts as securities, Celsius customers did not receive critical disclosures about its financial condition, investing activities, risk factors, and ability to repay its obligations to depositors and other creditors,” the agency said in a consumer alert.
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Three Arrows Capital, known as 3AC, and the crypto lender Voyager Digital have also recently filed for bankruptcy.
3AC Co-Founder Kyle Davies told The Wall Street Journal that the firm invested more than $200 million in Luna tokens in February, an amount that became essentially worthless after the coin imploded in May.
‘Anatomy of a Liar’
TerraUSD, or UST, and its sister token, Luna, crashed after UST lost its peg to the dollar, the foundation of it qualifying as a stablecoin, which is a cryptocurrency tied to a more stable asset like the U.S. dollar or gold.
Reaction on social media was swift and severe, with one person reposting Mashinsky’s June 11 tweet.
“One month ago, the CEO of Celsius said, ‘Do you know even one person who has a problem withdrawing from Celsius?’ One day later, Celsius suspended customer withdrawals. Today, the company filed for bankruptcy,” the tweet read.
“Anatomy of a liar,” another said and posted an image of Mashinsky with the tagline “Crypto You Can Believe in.”
“I worked hard at work and invested in your company, now I have nothing and a baby is about to be born, how could you let us down like that?!!!!!” another person tweeted.
One person asked “what about those of us who lost our savings?”
‘Lost Just About Everything’
“To fellow depositors: Do i understand correctly that there is literally NOTHING/NO ACTION we as depositors can take now? Just have to wait and see if they give us money back? If so, anywhere we should be keeping eyes on?” another person said.
“Trusted the wrong guy,” one poster said. “I am just glad that I’m still breathing, walking, looking up the sky and get to see the sun and cloud. Look down my dog is wagging her tail with a smile. Teaching myself happiness can be simple. Big lesson for me.”
“I’m a single mother. This will change the path of my life. I feel sick.” read another tweet.
One person who claimed to have “lost just about everything” acknowledged that “it’s my own fault for trusting someone else with my funds, but it still makes me want to–” and inserted the vomit emoji.
This person described herself as a single mom of 2 young kids “battling incurable Stage 4 breast cancer.”
“Yeah I’m really not sure how this all works,” the person said in a follow-up tweet. “I’ve just heard from other people that typically it takes years (which I don’t have) and usually you only get a small percentage of your funds back. I hope that’s not the case this time.”
Source: https://www.thestreet.com/investing/cryptocurrency/celsius-bankruptcy-filing-hits-boiling-point-on-social?puc=yahoo&cm_ven=YAHOO&yptr=yahoo