The link between FTX and Celsius that we didn’t know about
The link between FTX and Celsius that we didn’t know about

The link between FTX and Celsius that we didn’t know about

By Andrea Porcelli - 3 Nov 2022

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Dirty Bubble Media’s investigation, behind the leadership of Mike Burgersburg, has unveiled links between FTX and Celsius that now see the former a creditor of the latter nearing bankruptcy. 

The curious financial connections between FTX and Celsius

What might have seemed like a superficial investigation led Dirty Bubble Media to really dig deep into what appear to be real financial connections between the company of Sam Bankman Fried (SBF) and Celsius

Inspecting extensively in the public records of the near-bankrupt company, Mike Burgersburg noticed something that few would have been able to notice.

The Celsius company, according to public records investigations, used the FTX trading platform to buy its token (CEL) in 2021. The purchases were around 40 million CEL. They also coincided with a $750 million fundraising round. After the freeze on withdrawals, the Celsius company through the FTX exchange was able to liquidate millions of dollars in customer assets. These funds were then used to repay DeFi loans.

In addition, FTX, Sam Bankman Fried’s company, is a creditor of Celsius through a $104 million loan.

Were SBF and FTX aware of Celsius’ financial moves?

“To be clear — in Voyager, our bids are generally determined by fair market price, no discounts; goal isn’t to make money buying assets at cents on the dollar, it’s to pay $1 on the $1 and get the $1 back to customers.

If we were to get involved in Celsius, it would be the same.”

Sam Bankman Fried’s words on Twitter suggest that he seems intent on acquiring what remains of Celsius. Making a comparison with the Voyager platform recently acquired by SBF, a company close to bankruptcy at the same time as Celsius.

Therefore, we infer that the company at the head of FTX hardly ignored what was happening on its platform. Mainly because we are talking about a cash flow of $42 million, in the months of May through December 2021.

But Celsius’s movements on FTX are not limited to just that: between June and October Celsius sent 750 million USDC through FTX, attempting to use the money to initiate loans of its own. Therefore, it really seems impossible that SBF was not monitoring the movements of one of the company’s largest debtors.

Why is Celsius in serious trouble?

Celsius’ declaration of bankruptcy has exposed the platform’s serious difficulties. Further complicating the process of untangling Celsius is the argument made by its equity investors that they should have priority over creditors when dividing up the platform’s remaining assets.

Celsius has a $1.2 billion deficit made up largely of deposits from users, who will most likely never be repaid their investment. 

The real oddity is that the value of the assets in crypto appears to be $1.75 billion, but the entire market cap of the CEL token, is around only $300 million. 

The CEO of Celsius, Alex Mashinsky, said that the company could also sell mined Bitcoin (BTC) so that it can repay at least one of its loans and provide revenue for the company in the future. Celsius expects to be able to generate about 15,000 BTC through 2023.

According to many prominent figures living in the crypto world, the company in Mashinsky’s hands is hopeless and that investors will most likely not get their money back. 

In a truly scathing tweet, blogger economist Frances Coppola describes her take on Celsius’ moves, and describes her view of the company as a shadow bank:

“Deposits in banks are not even ‘customer assets,’ much less ‘assets under management.’ They are unsecured loans to the bank. They are therefore liabilities of the bank and are completely at risk in case of bankruptcy.

A bank’s account holders have no legal right to the return of their funds. Although the terms of the account say they can be withdrawn whenever the customer wishes, the bank may refuse to allow them to withdraw the funds if it does not have the liquidity to pay them.”

Although the terms of use state that it is not a bank, Celsius’ business model is that of an unlicensed, unregulated bank with no deposit insurance-a “shadow bank.”

Withdrawal of $10 million before filing for bankruptcy

Raising even more suspicions about the shady activities of Alex Mashinsky and his company Celsius was the $10 million withdrawal made days before the bankruptcy filing

The withdrawal was made by the Celsius CEO himself, as if he already knew about the freezing of client funds and the bankruptcy filing that would take place shortly thereafter.

The lawyer of the Celsius CEO stated: 

“In the nine months prior to that withdrawal, he consistently deposited cryptocurrencies totaling as much as he withdrew in May.”

He added that Mashinsky and his family still had $44 million worth of cryptocurrencies frozen on the platform.

As of a month ago, Mashinsky is no longer the CEO of Celsius. Despite this, he stated that he plans to come up with a plan to compensate investors.

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