Celsius Used New Customer Funds To Pay For Withdrawals
Despite repeatedly saying he was not selling CEL, and despite employees internally saying the token’s true value was zero, Mashinsky sold 25 million tokens to the value of at least $68.7 million between 2018 and bankruptcy, Pillay said. Co-founders Nuke Goldstein and S. Daniel Leon are cited as making CEL sales valued at $2.8 million and $9.74 million respectively. Pillay said Mashinsky’s claims to the media and on social media to “always have 200% collateral” were “far off the mark,” with 14% of Celsius’ institutional loans wholly unsecured in December 2020. That figure rose to nearly 36% by mid-2021 — and even then some of the collateral was in unstable assets such as FTX’s FTT token, Pillay said.
“What Celsius and Mr. Mashinsky never did was correct the record after the fact for the thousands of live audience members who heard these misstatements or for those who watched the recorded videos on YouTube before they were edited,” Pillay said. Pillay also uncovered “significant tax compliance deficiencies” in the company, saying that its mining arm may owe over $23.1 million in use taxes, and has reserved $3.7 million in liability in U.K. value-added tax.
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