Celsius had 'insufficient' accounting and operational controls, examiner says
The Examiner revealed that Celsius' digital assets in his client's Custody Wallets account were officially underfunded on June 11.
New
The independent examiner in the bankruptcy case of crypto lender Celsius has alleged that the company failed to implement “sufficient” accounting and operational controls in its handling of customer funds.
In an interim report released Nov. 19, Examiner Shoba Pillay made a number of stark observations as part of her forensic investigation into the bankrupt cryptocurrency lending platform.
One of the key revelations in Pillay's report was that Celsius' Custody program was launched "without sufficient accounting and operational controls or technical infrastructure", which allowed shortfalls in Custody wallets to be funded from of his other assets.
"[...] no effort has been made to segregate or separately identify the assets associated with the Withhold accounts, which have been commingled in the main wallets."
When it launched on April 15, Celsius' Custody program allowed users to transfer, exchange, and use coins as loan collateral. It was introduced after the company was ordered by New Jersey safety regulators to create a product that was distinct from Celsius' award-winning "Earn" product.
This mix of portfolios means there is now uncertainty about which assets belonged to the client at the time of the bankruptcy filing, Pillay said, noting:
"As a result, clients now face uncertainty as to what assets, if any, belonged to them at the time of the bankruptcy filing."
The interim report also shed light on what ultimately forced the lending platform to suspend withdrawals on June 12.
Pillay said the breaking point occurred on June 11, when clients' Custody wallets became underfunded. As of June 24, that figure had fallen a further 24% to $50.5 million in underfunding.
Celsius digital asset surplus and deficit in wallets on guard. Source:
The Examiner revealed that Celsius' digital assets in his client's Custody Wallets account were officially underfunded on June 11.
New
The independent examiner in the bankruptcy case of crypto lender Celsius has alleged that the company failed to implement “sufficient” accounting and operational controls in its handling of customer funds.
In an interim report released Nov. 19, Examiner Shoba Pillay made a number of stark observations as part of her forensic investigation into the bankrupt cryptocurrency lending platform.
One of the key revelations in Pillay's report was that Celsius' Custody program was launched "without sufficient accounting and operational controls or technical infrastructure", which allowed shortfalls in Custody wallets to be funded from of his other assets.
"[...] no effort has been made to segregate or separately identify the assets associated with the Withhold accounts, which have been commingled in the main wallets."
When it launched on April 15, Celsius' Custody program allowed users to transfer, exchange, and use coins as loan collateral. It was introduced after the company was ordered by New Jersey safety regulators to create a product that was distinct from Celsius' award-winning "Earn" product.
This mix of portfolios means there is now uncertainty about which assets belonged to the client at the time of the bankruptcy filing, Pillay said, noting:
"As a result, clients now face uncertainty as to what assets, if any, belonged to them at the time of the bankruptcy filing."
The interim report also shed light on what ultimately forced the lending platform to suspend withdrawals on June 12.
Pillay said the breaking point occurred on June 11, when clients' Custody wallets became underfunded. As of June 24, that figure had fallen a further 24% to $50.5 million in underfunding.
Celsius digital asset surplus and deficit in wallets on guard. Source:
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