Debtors of Celsius Crypto Crash Make Personal Pleas for Help

From time to time as I write this newsletter, I stop to marvel at the sheer amount of money circulating through tech companies. We often talk about acquisitions, quarterly earnings, and market capitalizations in the thousands of millions of dollars

The sheer scale of those numbers makes it easy to forget that ordinary people, through their routine investments and regular purchases, drive this huge economic ecosystem. Your neighbors may not spend cash like Elon Musk or Warren Buffett, but your possessions are no less personal.

We need a regular reminder of that reality, and the victims of the Celsius Network collapse are providing it.

In recent weeks, the technology and cryptocurrency industries have gasped at the demise of Celsius, a high-profile crypto lender who filed for bankruptcy in mid-July. The crash followed a sharp drop in cryptocurrency prices fueled by inflation, exposing Celsius’s strategy of borrowing funds and making risky bets that depended on cryptocurrency values ​​continuing to rise.

Celsius’s debtors include institutional entities in the crypto space, but the vast majority of its 1.7 million users are retail investors who gambled on the huge returns promised by the firm’s leadership. Although there is certainly an element of emptor warning Despite its losses, many sincerely believed Celsius CEO Alex Mashinsky when he repeatedly touted the company’s underlying strength and promised that the private company had enough reserves to meet its obligations.

More than 100 of those common investors have now written to a federal judge in New York overseeing Celsius’s bankruptcy proceedings. His powerful cards offer a window into the collateral damage caused by reckless entrepreneurs in a largely unregulated market. They describe the pain, shame, and anguish of believing in Celsius’s false optimism. Many take responsibility for his poor decisions, although virtually all are furious at the lender’s leadership.

A sample of his letters follows:

Thomas Bull, from Australia, who “had 95% of my life savings in Celsius”: “I have suicidal thoughts and the only reason I hadn’t taken my own life was the burden it would leave on my family. And I’ve lost 15% of my body weight in 6 weeks from the stress of suddenly losing everything I’ve spent my entire life building. Worst of all, my mom shared my house with me, so if I don’t pay for the house, she’ll be homeless at age 60 with no other savings. Her bottoming out of her to a dead end will be in my hands, and I just don’t see a way she can get me back.”

Dalena, last name and location not provided: “Unfortunately, I have all of my life savings on the Celsius platform. My family also trusted me to store their Bitcoin in my Celsius account. However, we did not expect to be taken by surprise. It was a lot of money that we were going to use as leverage for a better life: not having to live paycheck to paycheck, not having to worry about rent due, being able to pay our debt and college tuition. It may not sound like much to most people, but two years of our savings and investments have been stolen from us. For a lower/middle class family, this whole situation is very discouraging and extremely stressful.”

Merilou Athens-Barnekow, who had about $50,000 tied up in Celsius: “I’m a small depositor, an 84-year-old widow living on Social Security. The deposit was my life savings to pay for home care when I can no longer care for myself. I don’t have years to wait for my savings to be returned. I made this decision after seeing the terrible care my husband received at a rehab hospital that was also a nursing home.”

Gregory, last name and location not provided: “I am 71 years old, retired, and have money in the low six figures invested in Celsius. Since I am retired, I will never have the opportunity to replace those funds. I don’t know if I’ll ever get any of my deposits back, but I’m lucky in that regard. I will not starve and I will still have a place to live. The money, foolishly, was for my heirs. I dare not let them know that I lost their money even though they didn’t know I was staying at Celsius. In the end, I can only blame myself.”

It is unrealistic to expect lawmakers to weed out all the hucksters and hackers in the still nascent decentralized finance and crypto spaces. But as members of Congress and federal bureaucrats weigh additional guardrails (another regulatory proposal came Wednesday), the voices of ordinary Celsius debtors should ring in his ears.

The losses of Celsius’s victims might not have been in the billions, but they might as well have been.

Want to send thoughts or suggestions for Data sheet? Drop me a line here.

jacob carpenter


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From the Article:

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