The bankrupt Celsius platform was unable to establish sufficient accounting and operational controls to handle client funds. This was stated by independent expert Noda Pillai.
In the intermediate report for the court, the specialist noted that the critical flaws relate to the Celsius Custody product. Launched in April, the solution replaced Earn for American users. Regulators complained about the latter.
“No effort has been made to separate or separately identify account-related assets that were mixed in the main wallets,” the expert noted.
According to Pillai, this allowed the company to finance the deficit of depository wallets with other funds.
“As a result, clients now face uncertainty about what assets they owned at the time they filed for bankruptcy,” he said.
The expert also drew attention to the moment that probably forced the crypto lending platform to suspend withdrawals on June 13th. According to him, on June 11, client wallets faced underfunding. By June 24, the asset deficit had grown by 24% to $50.5 million.
Pillay also pointed out other shortcomings in Celsius’ accounting. For example, Alex Mashinsky and Daniel Leon, who founded the company in 2017, began tracking the balance of the platform only after the first complaints from supervisory authorities in May 2021. At the same time, they used the Google Sheets service for accounting, the expert noted.
The Bankruptcy Court is installed The deadline is January 3, 2023, by which the company’s customers must submit claims in order to qualify for a refund.
Celsius clarified that if they agree with the schedule set by the court, users do not need to provide evidence for the claim and take other additional actions.
As a reminder, customers who agree with Celsius’ scheduling of their claims as filed in the Schedules of Assets and Liabilities do not need to submit a proof of claim and no further action is required of them at this time with respect to such claim. https://t.co/zymkBeyZm5
— Celsius (@CelsiusNetwork) November 20, 2022
The next meeting in the company’s bankruptcy case is scheduled for December 5. The platform intends to “continue to discuss issues around Custody accounts and major wallets.”
Recall that in October the court approved the plan for the procedure for trading Celsius assets. Auctions may end before the end of the year.
The company filed a petition for additional time to develop measures to reorganize the business.
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