Celsius (CEL) Is Accused As Scam or Ponzi Schemes. Is It True?

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Celsius Network is a blockchain-based lending platform that is accessible through a free mobile app. Unfortunately, the firm had announced they were officially bankrupt in June 2022 and even accused of being scam. What happened? Let's find out with us now.​

What happened to Celsius? Why did they collapse?​

Celsius was intended to operate somewhat like a traditional bank, albeit for crypto rather than fiat currency. It was once considered among the most successful parts of the decentralized finance (DeFi) movement.

In June 2022, Celsius said it had 1.7 million customers and that it offered yields as high as 17% per year extremely high annual percentage yields (APYs) with up to 17% on cryptocurrency deposits.

But on June 12, it all came crashing down. Celsius posted a memo informing users that it had frozen their assets, sending the price of Bitcoin and other cryptos down along with it.

Netizens were told they could earn interest on cryptocurrencies they put into Celsius. The biz generated that return by investing people's funds in the cryptocurrency market. Celsius needed to make enough money on its trades to produce those interest fees. When the crypto market crashed, amid general economic uncertainty, Celsius froze all withdrawals, swaps, and transfers on its network.

However, the firm tried to hide the reason why they were collapsed and denied all the rumors that Celsius was having problems with clients' access to their funds and he suggested that its critics were being paid by competitors​

Celsius is accused as being Ponzi Schemes​

An ex-employee of Celsius Network suspended all transactions and accused the company of operating as a Ponzi scheme in a lawsuit in July 2022.

One of its former asset managers has alleged in a filing to the New York County Supreme Court that this all devolved into nothing more than a grubby, unsustainable Ponzi scheme. Jason Stone, the CEO and founder of KeyFi, who managed billions of dollars worth of cryptocurrency investments on behalf of Celsius from August 2020 to March 2021, said Celsius began to fall apart when the prices of digital assets, such as Ethereum and Bitcoin, soared at the start of last year.

At that point, Celsius' customers started withdrawing their holdings to sell high and bank a fat profit. Celsius, however, allegedly did not have enough funds to cover these transactions, and was forced to buy cryptocurrencies at a loss to return people's assets. In an attempt to attract new customers to inject more cryptocurrency to its platform, Celsius started offering double-digit interest rates.

Celsius confirmed a security breaches​

On April 16, 2021, Celsius confirmed that a security breach had occurred in its systems; a third-party server with customer data had been compromised, resulting in a portion of the company's customer list being exfiltrated and a phishing email being sent to Celsius customers.

Once again, the firm announced that a list of customer emails had been leaked in a data breach and an analyst is warning against phishing emails that could target the affected users on 26 July 2022.

After reading the problems and scandals of Celsius, do you think it is scam or Ponzi Schemes? Let us know your opinion by leaving words in the comment section at the bottom box below.

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