Celsius customers write pleas to bankruptcy court to get crypto back: ‘This is an emergency situation, simply to keep a roof over my family and food on their table.’
Some customers of crypto lender Celsius Network, which filed for bankruptcy earlier this month, have written to the Bankruptcy Court for the Southern District of New York, with a hope of getting their funds back.
As digital assets crashed, Celsius, which said it had more than 1.7 million users as of June, halted withdrawals since June 12. The crypto lender allowed consumers to buy, borrow or deposit their cryptocurrencies and earn interest of up to 18.6% annually. Most “high yield” savings accounts in U.S. dollars offer annual percentage yields closer to 1% or less, according to Bankrate.
Celsius has a roughly $1.2 billion hole in its balance sheets, according to bankruptcy filings. It had $5.5 billion total liabilities as of July 13, including more than $4.7 billion owed to Celsius’s users. The company had $4.3 billion of total assets, according to a filing.
In bankruptcy filings, Celsius noted that its customers transferred ownership of their crypto to the company, a move experts say could potentially hint at its plans to request its users be treated as unsecured creditors in the bankruptcy process.
Read: Is your crypto on Celsius or Voyager? Factors that determine whether you may get your money back
In letters to the bankruptcy court, many Celsius customers said they felt lied to by the company and by Alex Mashinsky, its chief executive. “Every Friday AMA (Ask me anything) on YouTube, Celsius continued to tell people they were better than a bank. Safer, with better returns. As well as tell us they had billions in liquid cash,” wrote Brian Kasper, one of the platform’s customers.
“I watched every single AMA each Friday since sign-up, and week in and week out Alex would talk about how Celsius is safer than banks because they supposedly don’t rehypothecate and use fractional reserve lending like the banks do,” Stephen Richardson wrote in a letter to the court. He described himself as a Celsius customer since 2019, with more than six figures worth of crypto on the platform.
“I am embarrassed, ashamed, and disgusted by the utter lack of transparency from a company that claims to be an ‘open book’ and highly transparent compared to any and all banks,” Richardson wrote.
Celsius didn’t reply to an email seeking comment. Mashinsky didn’t immediately respond to a request for comment.
A social media thread on Reddit emerged about a week ago to show how Celsius clients can contact the bankruptcy court and trustee. It isn’t clear if the posting has been a catalyst of individual letters to the court.
Flori Ohm, a single mother of two daughters headed to college next year, wrote in another letter: “I and my family are severely impacted both in financial and mental health by the bankruptcy and locked up cryptos. I always check the app if my cryptos are still there. I can’t focus [on] my job or sleep.”
“I have supported my parents and my daughters by myself for [my] whole life. I am struggling hard [to make a] living,” she wrote.
Stephen Bralver, another Celsius customer, said he has less than $1,000 left in a Wells Fargo checking account to support his family, after Celsius froze all withdrawals. Bralver called for a release of his funds with Celsius, saying that “this is an EMERGENCY situation, simply to keep a roof over my family and food on their table.”
In a letter filed on July 21, Sean Moran, a resident in Ireland, wrote that he lost his farm, and that his family was left homeless because of Celsius’s bankruptcy. “Family are distraught with my decisions of trusting Celsius and promising them a better future,” he wrote.
Yet, the Celsius bankruptcy hasn’t shaken some crypto investors’ confidence in the rather nascent asset class. “I still have full faith in crypto, but do not have faith in the management of Celsius with the current team,” wrote customer Brad Ungar, in his letter to the bankruptcy court.
“I would sincerely request that you let all Celsius depositors withdraw their cryptocurrency 100%, rather than converting our claims into dollar amounts on a fixed date,” Ohm wrote.
In a presentation posted by Celsius on its bankruptcy website, the company said it intends to give customers the option, “at the customers’ election, to recover either cash at a discount or remain ‘long’ crypto.”
Bitcoin, the world’s largest cryptocurrency, was down 2.6% Monday to around $22,153, and off more than 67% from its peak, according to CoinDesk data. Stocks mostly advanced Monday, with the Dow Jones Industrial Average DJIA,
