Celsius Network Under Fire for Crypto Liquidation for CEL Token

A recent investigation has revealed significant insights into Celsius, the defunct cryptocurrency lender. Apparently, Celsius has used funds from its users to buy and support the value of its own token, CEL.

The company’s leadership, including CEO Alex Mashinsky, reportedly sold large quantities of CEL for cash.

They also offloaded substantial amounts of CEL, while concurrently implementing stop-loss orders to counteract any price drops.

Celsius Has Been Financially Unstable Since It’s Inception

Attorney Shoba Pillay was selected by the bankruptcy court to serve as the Examiner. He found out that Celsius has been financially unstable since its establishment.

It argues that the cryptocurrency lending platform utilised CEL as part of a scheme to benefit its executives.

All the while taking advantage of its clients. As per the research findings, Celsius fell short of its commitment to transparency from the outset. The ICO for the lender’s CEL tokens aimed to raise $50 million.

Although, only 203 million of the 325 million CEL available for sale were sold, bringing in a mere $32 million.

The company failed to disclose this information to its investors. The company also made large purchases of CEL in 2018 and 2019.

This was during a time of low cryptocurrency returns and ramped up buying in 2020 was driving up the price.

Celsius timed its purchases and set resting orders to buy CEL if its value dropped below a certain point.

This was done to further manipulate the market. According to the study, Celsius engaged in secret sales of its CEL tokens through private OTC deals.

They did this while buying the same tokens publicly to prevent any potential price drops. The report claims that the company referred to this approach internally as the OTC Flywheel.

As per the study, Celsius failed to earn enough from its crypto investments to support its CEL buybacks.

This occurred after it turned to using customer funds as a source of funding. The company stopped keeping track of customers’ funds, and as a result, was unable to fulfil withdrawal requests in June 2022.

This eventually led to the company’s bankruptcy declaration in mid-July. CEL was only traded on a small number of exchanges, with only 25 active spot markets.

It was not listed on major regulated exchanges such as Coinbase or Binance. Though it mostly traded on exchanges that have since gone out of business.

This made it easier for Celsius executives to manipulate the price.

CEL Token Allegedly Used for CEO’s Personal Gain

Celsius’s large-scale purchases of CEL amounted to $558 million. Due to this the token’s value rose dramatically, reaching a 14,000% increase starting from 2020.

This surge in price reportedly benefited top executives such as CEO Alex Mashinsky and co-founder Daniel Leon.

They made huge profits by selling CEL tokens worth a minimum of $68.7 million and $9.74 million.  This was between 2018 and 2022. The study found that Celsius implemented measures to buy back the tokens he sold.

This was done in order to counteract the effects of its CEO Alex Mashinsky’s large sales of CEL. The company increased the size of its resting orders to buy all the CEL being sold by Mashinsky and related companies.

The reason the company used all its resources to purchase more CEL tokens lies with the individual who holds the largest amount of CEL.

This was told by the management at Celsius. Another member of management stated that all their financial resources were depleted.

This was a result of paying executives and trying to increase the net worth of Alex Mashinsky by investing in the CEL coin.

Both CEL and FTT are the respective native tokens of Celsius and FTX. They have similarities in regards to the alleged illegal actions surrounding them.

The SEC has designated FTT as a security, as previously mentioned. This was based on the claim that FTX utilized the funds generated from the sale of FTT.

The funds are to be used to support the operations, growth, and development of the platform.