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Celsius ex-employee reveals the reason why the crypto giant went bankrupt after absorbing 11.8 billion

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Celsius has had a series of internal missteps in the years leading up to its recent liquidity problems, according to internal documents reviewed by former employees and CNBC.
Employees interviewed by CNBC painted a picture of risky, disorderly and alleged market manipulation.
“The biggest problem is the failure of risk management,” said one former employee.

 

Issues with Celsius appeared to have been brewing for years before the cryptocurrency lending company filed for bankruptcy.

The company has made a series of internal missteps that have contributed to the recent turmoil, according to former employees and internal documents reviewed by CNBC. Multiple employees painted a picture of risk-taking, disorder and alleged market manipulation.

Timothy Cradle, former head of financial crime compliance at Celsius, told CNBC: “The biggest problem is the failure of risk management, and I think Celsius has a great idea, they provide a service that people really need, but they don’t manage it well. risk.”

A month ago, the Hoboken, N.J.-based company made headlines for freezing customer accounts due to “extreme market conditions.” As of June, it has attracted 1.7 million customers and $11.8 billion in deposits. Celsius customers told CNBC they were attracted by the 17% yield on cryptocurrency deposits offered by the company.

Behind the scenes, Celsius lent the money to hedge funds and other institutions willing to pay higher yields. The company will also invest in other high-risk cryptocurrency projects, internal documents show. After that, Celsius will share these profits with customers. The model collapsed as cryptocurrency prices fell, causing multiple companies to freeze assets and at least three to file for bankruptcy.

Cradle said he was part of a three-person compliance team from 2019 to 2021. This position requires him to apply international financial law to Celsius’ business. But he said resources are limited.

“The compliance team is so small, compliance is a place to spend money,” Cradle said….

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