Bankrupt digital currency lender Celsius Network has reached settlements that could allow it to return customer assets, the Wall Street Journal reported on July 21.
Approval for the settlements will see court on August 10, paving the way for 30,000 claims worth $78 billion to be settled. Another court date set for October will confirm Celsius’ reorganization plans.
All being well, customers who saw their funds locked on Celsius Network when it went under last year could see what’s rightfully theirs before the end of the year.
Celsius’ lawyers have vehemently argued that users are entitled to no more than they deposited, but some have filed claims for damages due to alleged misconduct.
Cerlsius CEO Alex Mashinsky faces fraud, market manipulation charges
The hopeful news for Celsius’ Network victims comes on the heels of the arrest of its CEO, Alex Mashinsky. He was charged with fraud and market manipulation.
Prosecutors accused Mashinsky of misleading users into pouring billions into his lending network, which some have likened to a classic Ponzi scheme. The Celsius boss painted his platform as a modern-day bank, implying that depositing and earning interest was completely safe. Just a day before it ceased withdrawals, Mashinsky denied any problems on Twitter, an all-too-common occurrence in the industry.
After Mashinsky’s arrest, an unsealed indictment revealed that Celsius Networks’ activities were far riskier than depositors had been led to believe and far less profitable, too.
Additional accusations in a case brought by federal prosecutors in Manhattan alleged that Celsius Network misused customer funds to manipulate the price of CEL tokens upwards before unloading its stash on unsuspecting speculators.
In addition to criminal charges, agencies like the SEC, CFTC, and FTC seek to fine Mashinsky and ban him from the industry.
The era of counterparty risk is coming to an end
With the collapse of Celsius’ Network, several other similar lending platforms, and prominent exchanges like FTX, it’s becoming clear to digital currency users that counterparty risk is real and is not worth the supposed rewards.
At the same time, the world is beginning to wake up to Bitcoin’s true potential as a rapidly-growing on-chain economy is flourishing. On BSV, BTC, and to a lesser extent, BCH, Ordinals, BRC-20 tokens, BitMap, and other protocols are being developed, including some linked to finance and lending.
Could we finally reach the stage where it’s unnecessary to trust dodgy offshore firms with custody of funds because similar applications are available on the BSV blockchain with no counterparty risk? Will the true promise of Bitcoin take root in the chaos of the past two years and finally flower to usher in a new era in the digital currency industry?
Time will tell, but as the old guard prepares for prison and the remaining platforms come under increased pressure to shape up or ship out, things are looking up.
Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.
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