Cryptocurrency lending platform Celsius has been sued multiple times since it went bankrupt and caused huge losses for investors. However, that is only one aspect of its problems as a lawyer for its clients accused Celsius of securities fraud.
Specifically, with millions of dollars in assets tied to his clients’ Celsius accounts, Dr. Jonathan Levy referred to Celsius insurance claims as a case of fraud related to offering unregulated securities. Finance Feeds reported on August 16.
As the lawyer explains:
“There is no insurance. Celsius’s own usage time stated that there is no fuse in the boilerplate printing. Yet we see Celsius and GK8 claiming insurance in bold. It is a deliberate scam to aid the supply of billions of dollars of securities.”
Disputed insurance claims – Celsius
On its website, Celsius previously stated that its assets were insured for $750 million. . However, after the firm filed for bankruptcy on July 13, all references to insurance on its website inexplicably disappeared.
Celsius also claimed to have insurance through Fireblocks. Still, the tech platform’s compliance officer denied it, saying Fireblocks has nothing to do with the insurance or custody industry and only provides custody software to its customers.
Alex Mashinsky, CEO of the cryptocurrency lender, noted that insurance was never integrated into Celsius’s operations, although GK8, a subsidiary of Celsius, claims to own it. $500 million insurance through AON (NYSE: AON). Additionally, Dr. Levy questioned the validity of these insurance claims.
In a class action lawsuit filed in the US state of New Jersey, Celsius earned $10 billion through the sale of unregulated securities in a Ponzi scheme and persuaded investors to pay inflated prices for their financial goods.
During the withdrawal freeze and before filing for bankruptcy, Canadian regulators launched an investigation into Celsius to clear light on what was happening behind the scenes.